by frog
International support for the idea of a tax on financial speculation is growing. A tax of a fraction of one percent on every financial transaction would have little effect on normal share trading or currency movements. However to those who use high powered computers to make thousands of automatic trades each second, a fraction of one percent tax will add up very quickly. In the UK the campaign is called the Robin Hood Tax, and they’ve released this exquisite video explaining it
It’s a bit like a really cheap GST, but not just for goods and services – for financial instruments also.
http://robinhoodtax.org.uk has a poll on their home page which asks whether the idea is a good one or not. Soon after launch, Goldman Sachs used a computer to spam the ‘no’ votes – casting over 4,000 votes in under 20 minutes. If they’re scared of it, then maybe it’s a good idea? ;-P
Published in Economy, Work, & Welfare | Environment & Resource Management | Featured by frog on Tue, March 2nd, 2010
Tags: banker, robin hood, tax, tobin tax
on the trolls and those who are unable to keep on topic
The Robin Hood tax is a great little idea.
Consequently, it has little hope of becoming a reality.
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Hey fellas, whatyer picking on bankers for?
My guess is this is a tobin-type tax… and if we can get Bill Gates to say okay for MS to code it as an app for all those money machines then it could be a goer..
Oops, lookza like I gotta go now..
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Picking on bankers is like spearing grapes with a tooth-pick.
(or hemorrhoids with a needle)
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There is little support for this in the US, which means you can forget about it.
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G/F,
hemorrhoids— for heavens sake!Now I have a little more time mebbe a tobin on shadow bankers (of the shadow banking league) and other hoods would stand targeting with greater credibility.. any thoughts on that.?
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But unless we can get the US and China on board, it is never going to work.
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G/F,
not back-tracking from my hema strikeout you understand, but the good Tom has another expression for this kind of thing.. along with his solution. Enjoy! Oh and if time permits don’t miss Tim’s comment thereunder
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If banks have greater expenses, guess who foots the bill?
If nothing else it gives a stage for banks to stand on for justifying increases in mortgage rates.
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Tom – I thought farmers were earthy folk and used to bearings and the like.
I’ve got
pilesof expressions like the one you struck out, but I’ll internalise them for your sake.Tim’s describing the dark side of politics, for sure.
http://riverdaughter.files.wordpress.com/2009/07/head-up-ass.jpg
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The more countries which do this, the more others will join.
And as for impact on bank mortgage rates, it might well reduce them – given the perverse impact of the trading in our currency under the current system.
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Sounds good to me.
Trevor.
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I like any idea that will force this non-productive sector to pay something no matter how small !
We simply can’t continue to carry the speculators
How about also linking bonus’s to profits while we’re at it ?
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Tim Harford best expresses my view on this The Robin Hood Tax – evidence free policy making.
http://blogs.ft.com/undercover/2010/02/the-robin-hood-tax-and-evidence-free-policy-making/
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evidence free policy making. has the scientist in me retort with Sagan’s the absence of evidence is not evidence of absence.. so to encourage scrutiny.. pros and cons.. rather than deny such possibilities..
Not much time personally to go into this transactions tax proposition.. do I take it correctly that both sides of any two-party transaction are required pay up, or simply one. If so, which one..? Creator or taker..?
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Havn’t seen much evidence either for or against, but worth consideration. http://www.apttax.com/index.htm
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Thomas,
Thanks for that link. Scan suggests answer to my query on who pays. Account based. Thus anchored in banks and they’ll want compensation/s etc. Nothing yet re accounts — there are many types, not least public, private and corporate.. then ‘shadow’ players with their privileged exemption positions would I sense be disinclined to shelve or shaft existing tax regimes for this replacement(?).
A very great deal of goodwill needed – and that’s just from what I see now.
BTW would you happen to know if the William Hermann, Director, at that link is the same guy as Bill Herman, Wharton Biz School and coauthor with Chomsky..?
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That’s Ed Herman. No relation.
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I hate to rain on the parade but this is probably not a good idea.
Every jurisdiction would have to agree to levy the tax. Any jurisdiction that did not would be swamped with banking business if the others did.
It would create another huge avoidance industry.
The poor, middle class and moderately rich would be unable to avoid it, but the super rich and powerful would completely side step it.
I do like the idea of reigning in the banks. But it cannot be done be such indirect means.
peace
W
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So, it’s back to pitchforks!
Bliss!
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NATIONALISE BANKS TO ENFORCE ROBIN HOOD TAX
Well I like the idea of the Robin Hood tax if it can be enforced and I think bliss has a point there , Can it be enforced or will there be loop holes for another evasion industry.
In a capitalist society that may very well be the case however it could be a different ball game if the banks holding a monopoly position are nationalised.
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My understanding is that unlike land, buildings and institutions (like a company) which can be sold pretty much without control, the soverignty of OUR currency can not be even though the actual currency can be, hence if someone or an organisation buys or sells a NZ$ then the finance institution facilitating the transaction has to levy the tax should NZ law impose it. If the nation of the other currency involved in the transaction also imposes a FTt/Tobin-like tax then both the buyer and seller pay the tax to the respective nation.
If governments the world over see a political advantage in imposing the FTT-Tobin tax (because they can reduce taxes voters pay) then they will consider it.
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Why is a transaction tax replacing all other taxes ignored as a possibility? A transaction tax fits the aims of a tax system very well. It is extremely broad based. The broader base may actually cut banks tax bill also. Cheap to collect as it can be done electronically and automatically on every bank transfer. Saving billions in tax collection, recovery and accounting costs for both businesses and the government. A lot of time and angst now faced by business people preparing tax returns, paying PAYE and GST could be avoided. Encourages saving and investment rather than consumption. Leaving money in a productive venture rather than borrowing to increase dividends. Discourages taking NZ dollars offshore and speculation in currency. It is naturally progressive as a percentage of transactions means those who transfer larger sums of money pay the most. Very difficult to dodge. Black market cash transactions cannot be caught, but that happens now. In a few years when all cash is electronic it will be almost impossible to avoid. Removes all the present accounting lurks, accounting costs and probably accountants who will have to turn their intelligence to making companies productive instead of helping them dodge tax.
Is it because the real wealthy and farmers who pay little tax now would actually have to pay some instead of the system relying as now on high tax from highly paid (skilled) wage and salary earners. The only people with a high enough income to be tax positive, but without a business or other means of tax avoidance. Or is it because the banks would not accept it. as it would reduce their profits from currency speculation.
See the link above as to how it might work. Why is a transaction tax replacing all other taxes ignored as a possibility? A transaction tax fits the aims of a tax system very well. It is extremely broad based. Cheap to collect as it can be done electronically and automatically on every bank transfer. Saving billions in tax collection, recovery and accounting costs for both businesses and the government. A lot of time and angst now faced by business people preparing tax returns, paying PAYE and GST could be avoided. Encourages saving and investment rather than consumption. Leaving money in a productive venture rather than borrowing to increase dividends. Discourages taking NZ dollars offshore and speculation in currency. It is naturally progressive as a percentage of transactions means those who transfer larger sums of money pay the most. Very difficult to dodge. Black market cash transactions cannot be caught, but that happens now. In a few years when all cash is electronic it will be almost impossible to avoid. Removes all the present accounting lurks, accounting costs and probably accountants who will have to turn their intelligence to making companies productive instead of helping them dodge tax.
Is it because the real wealthy and farmers who pay little tax now would actually have to pay some instead of the system relying as now on high tax from highly paid (skilled) wage and salary earners. The only people with a high enough income to be tax positive, but without a business or other means of tax avoidance. Or is it because the banks would not accept it. as it would reduce their profits from currency speculation.
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Ideally the robbin hood tax needs just a good bloc of developed countries to do it. You can count countries like china completely out of the question because they dont have liberalised capital accounts (i.e. a floating exchange rate) so there is no speculation on their currency. The worst thing that could happen would be for developing countries to liberalise before they are ready so that the government could collect a tobin tax. Read Ha Joon Chang “Kicking Away the Ladder” if you want to know what developed countries did to get to where they are and what developing countries need to do (plus how the developed world is ‘kicking away the ladder’, hence the title). As for developed countries this seems likely that it would be a great way to shift away from casino capitalism. If anyone could tell me the productive value of currency speculation id love to know. JK?
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“If anyone could tell me the productive value of currency speculation id love to know.”
To find the market price of the currencies. Learn some economics please.
If you want a simplified non-economics explanation:
Have you ever gone overseas? How do you get foreign currency? Fixed exchange rates create shortages of one currency and excesses of others, just as happens with other products and services when you remove the market and don’t allow it to signal the correct price.
If you think politicians can set the price of money better than the market, then you probably support, or are, Muldoon.
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I suspect if anyone believes the value of any floating currency is the sum of the relative terms of trade and capital flows needed to sustain real borrowing (that is, borrowing to buy something that can held, seen or smelt) and trade then they are naive or something that is less polite. Speculators can buy/sell currency, borrowing at whatever they believe to be worthy given the risk without having anything real to buy or sell at the end of the day/week/month/year other than they own the aforementioned currency.
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