Robin Hood tax
Encyclopedia
The Robin Hood tax commonly refers to a package of financial transaction tax
es (FTT) , proposed by a campaigning group of civil society NGOs
. Campaigners have suggested the tax could be implemented globally, regionally or unilaterally by individual nations. Conceptually similar to the Tobin tax
, it would affect a wider range of asset classes including the purchase and sale of stocks, bonds, commodities, unit trusts, mutual funds, and derivatives such as futures and options. The Tobin tax
was proposed for foreign currency exchange only.
A UK based global campaign for the Robin Hood tax was launched on 10 February 2010 and is being run by a coalition of over 50 charities and organizations, including Christian Aid
, Comic Relief
and UNICEF. The UK government published a response favouring instead bank levies and a financial activities tax, citing the International Monetary Fund's report to the June 2010 G20 meeting, "A Fair and Substantial Contribution by the Financial Sector". The Robin Hood tax campaign also supports both a Bank levy and a Financial Activity Tax, saying they are agnostic about the chosen mechanism providing it involves a sizable transfer of wealth from the financial sector to the needy. However most of their campaigning efforts have focussed on the FTT variant.
By autumn 2011 the Robin Hood campaign had gained considerable extra momentum and support from prominent opinion formers, with a proposal from the European Commission
to implement an FTT tax at EU level
set to enter the legislative pipeline. The campaign has also attracted extensive criticism, with a global implementation of the FTT tax being opposed by several G20 members at the November Summit, with several EU members also opposing a regional FTT for Europe.
released The Robin Hood Tax, an earlier proposal presenting their case for a currency transaction tax
. In 2008, Italian treasury minister Giulio Tremonti
introduced a windfall tax on the profits of energy companies.
Mr Tremonti called the tax a "Robin Hood Tax" as it was aimed at the wealthy with revenue to be used for the benefit of poorer citizens, though unlike the tax campaigned for in 2010 it was not a transaction tax nor global nor aimed at banks.
The amount of money raised would depend on a number of different factors, including how many countries agree to the tax and the rate. In March 2010 the campaign's web site stated that: "$400 billion is our best estimate of what the tax will eventually raise from a range of rates on different transactions."
It has been proposed by the campaigning (lobbying) group that the money raised from this tax be split between domestic use and international aid.
In an article co-authored by one of the campaign's most prominent advocates, Comic Relief
founder Richard Curtis
, it was suggested that approximately 50% of funds raised would be assigned to domestic use to protect public services and for governments to tackle poverty at home. Under the proposal, international efforts to reduce global poverty would receive another 25%, and the remaining 25% would go towards helping low income countries mitigate the effects of climate change and to reduce their own emissions.
The British campaign's launch was accompanied by an online poll on the charity's web site for the public to have a say on whether they support the tax. Initially, there was an apparent backlash with what appeared to be thousands of members of the public visiting the Robin Hood Tax to vote against the idea. However on investigation it was claimed by the lobbying group that some five thousand of the "no" votes came from only two servers, one of them belonging to the investment bank Goldman Sachs
.
The Robin Hood tax has been supported by some 350 economists in a letter written to the G20
, including Joseph Stiglitz and Jeffery Sachs.
Politicians supporting the tax include Angela Merkel
, Nicolas Sarkozy
and Katsuya Okada
, Japan's foreign minister.
According to a press release by the lobbying organization, support has been forthcoming from the financial sector by prominent figures including George Soros
, Warren Buffett
and Lord Turner
, chairman of the UK’s Financial Services Authority
.
At the February 5, 2010 G7 meeting in Canada consensus was formed for some form of tax charged against large banks to cover the cost to government of insuring banks against future crisis. G7 officials planned to seek approval from other G20 nations at the June 2010 summit before progressing towards implementation.
While the movement supporting this or similar transaction taxes is international, the use of the "Robin Hood" theme has been especially prominent in Great Britain. An early thrust of the 2010 campaign involved grass roots supporters being encouraged to lobby MPs and the British Treasury
for an implementation of the Robin Hood tax to be announced unilaterally as part of the UK's 24 March 2010 Budget. The British Chancellor refused to implement a Robin Hood tax, saying it would need to be co-ordinated internationally or else it would result in thousands of jobs being lost in the UK.
Another theatre for the campaign is the European Parliament, where in March 2010 a resolution was passed calling for progress to be made in identifying ways to set up a "Robin Hood" type tax.
; Harvard's Dani Rodrik
and Cambridge's Ha-Joon Chang
. A copy of the letter was also sent to Bill Gates
, who has been commissioned by G20 chair and French president Nicolas Sarkozy
to investigate new ways of funding the development of low income countries. The Guardian
reported that staff from the Gates Foundation
are also involved in international lobbying at G20 capitals.
The Robin Hood campaign has been attempting to build international public enthusiasm for the tax prior to the November G20 summit; in June the organisation reported the staging of campaigning events in 43 different countries. In late June the European Commission
reversed its earlier opposition to the tax, proposing EU financial transaction tax
be adopted within the 27 member states of the European Union. Moves to pass the proposal through the legislative process are scheduled to commence in autumn 2011.
A European version of the tax is projected to raise up to €30bn a year. ECB
president Jean-Claude Trichet
warned that implementing the tax could hurt Europe unless it could be rolled out globally.
In August 2011 Sarkozy and German Chancellor Angela Merkel
affirmed their support for the proposed European implementation. Great Britain's prime minister David Cameron
remains opposed to the tax unless it can be implemented globally, meaning that a European implementation would likely have to be confined to the Eurozone
not the whole EU
.
As part of his September State of the Union speech, President of the European Commission José Manuel Barroso officially proposed an upgraded package of transaction taxes for adoption by the EU, now projected to raise up to €55bn ($75bn) per year. Also in September, Bill Gates presented his preliminary findings to the 2011 IMF & World Bank meeting
in support of the Robin Hood tax. Gate's proposal is for a set of taxes which could raise between $48-250bn per year. Unlike Barrosol's proposal, Gates is advocating the tax be adopted on a G20 wide bases rather than for just the EU, and Gate's plan is geared more towards raising funds for aid and development rather than for regular public spending and repairing government finances. Various British business, banks and economists such as Howard Davies
have attacked the EU proposal saying it would be bad for growth and would harm the economy. Mark Lawson
for the Robin Hood campaign responded to developments by saying "Game on!".
In October, Adbusters
, the organization responsible for sparking the Occupy movement , called for a global march in support of the Robin Hood tax, to take place on October 29th just before the 2011 G20 leaders summit.
Marches did not occur in all "occupied" cities, but events involving several hundred protesters did take place at locations including Washington DC , Vancouver
and Edinburgh
.
Also in October the Robin Hood tax was endorsed by His Holy Father the Pope
. In November, Rowan Williams the Archbishop of Canterbury
, re-affirmed his support the Robin Hood campaign with an article in the Financial Times, saying the Vatican's strong backing for a FTT was "probably the most far-reaching" of their recent statements on reforming the International monetary system.
In November, Bill Gates presented his report to the 2011 G-20 Cannes summit
, saying that a FTT tax could be an effective way to raise funds to tackle poverty in the developing world. However Gates also told the Financial Times that an FTT was only one option among many, admitting that in his opinion it was less important than tobacco and fuel taxes
. At the G20 Summit there was strong support for the Robin Hood tax from Germany and France but opposition from other members including the US, Canada and Australia.
A few days after the G20 Summit, European finance leaders debated the possible introduction of a regional FTT tax. Again there was strong support from Germany and France but also from Austria, Belgium, Greece, Finland, Luxembourg, Spain, Portugal, while strong opposition comes from Britain, Sweden, Denmark, the Czech Republic, Romania and Bulgaria, with some members being skeptical especially about the value of implementing an FTT without including at least all 27 EU states. As European Union members remain devided over the issue, advocates of the FTT have said it could be implemented only within the eurozone, excluding countries like Sweden and the United Kingdom.
and starring Bill Nighy
, in which Bill Nighy
plays a banker who is being questioned about the Robin Hood tax. He eventually admits that the tax would be a good idea and would not be too damaging to the financial sector.
proposal but would apply to a broader set of financial sector transactions. Tobin suggested a form of currency transaction tax
. This is a type of financial transaction tax
, which taxes specific types of currency transaction. This term has been most commonly associated with the financial sector, as opposed to consumption tax
es paid by consumers.
Another difference between the Robin Hood FTT and the Tobin Tax is that the Tobin Tax was intended primarily to stabilize the economic market rather than generate revenue. Economists and analysts are now divided as to whether a small transaction tax would have a significant braking effect on the velocity of trades. According to the campaigning organization, the Robin Hood Tax campaign presents the raising of revenue for domestic use and to fund international aid as a leading aim.
After the June 2010 G20 meeting of finance ministers in Busan
, the G20 were no longer agreed even for the less radical global bank levy, with opposition led by Canada and Australia. Officials from EU, USA and UK said they were still planning to implement levies on their own banks, although the tax would likely be at a lower rate now to limit the risk of banks moving to jurisdictions that aren't planning on implementing the levy. Following on from the Pusan meeting but prior to the main 2010 G-20 Toronto summit
, the European Union president Herman Van Rompuy
announced that the EU had a common position in favour of both a Robin Hood style transaction tax and a bank levy which they would push for at the G20 gathering. However, according to the Canadian Embassy Newspaper
there were divisions within the EU with some member countries such as the Czech Republic
against any form of bank tax.
No consensus for the tax emerged from the 2010 G20 summit. Prior to the 2011 G20 Summit in November, the Robin Hood campaign had became even more prominent, though it also provoked dozens of critical articles. Again it failed to achieve consensus at the 2011 summit.
Other unintended consquences of an FTT could include a reduction in professional market participants such as market makers who stand ready to buy or sell at prevailing prices. This could impact the orderly and efficient operation of markets, including the price discovery process. It has been suggested that such reforms could lead to reduced liquidity, wider bid / offer spreads, and greater volatility.
According to the United States Chamber of Commerce
, the tax could double the cost of certain financial transactions and could cause the Dow Jones Industrial Average
to fall by 12.5%.
Mike Devereux, director of the Centre for Business Taxation at Oxford University,
has argued the tax would effectively be a stealth tax as the banks would pass all costs on to their customers, with no guaranteed transparency about who exactly would bear the costs.
Economics writer Tim Worstall
has made similar arguments, stating the tax would ultimately be paid not by the banks but by ordinary consumers and workers. Worstall also argues that overall an FTT tax would reduce tax revenue, so would fail to help provide extra money for helping the poor.
In 2011 Oxfam
banned a pensioner from one of its stores as he was incensed by the organization's support for the tax, feeling that it could reduce the income of small time pensioners and shareholders like himself.
estimating an FTT could result in over 100,000 job losses from London's financial sector.
Andrew Tyrie
, Chairman of the UK Treasury Select Committee, has listed 17 problems with the FTT tax including a loss of overall tax revenue for Britain. Critics have conceded that the FTT would reduce the overall volumne of transactions especially those originating from High-frequency trading
, but deny that it would reduce the risk of further crises in the financial sector.
When a 0.5% financial transaction tax was implemented in Sweden, over 50% of trades in Swedish equities moved to London. On 15 April 1990, the tax on fixed-income securities was abolished. It is notable that the tax imposed an increased cost on government borrowing, and this may have influenced the decision to repeal the tax.
poll of more than 27,000 people published in January 2011 found that Europeans are strongly in favour of a financial transaction tax by a margin of 61 to 26 per cent. Of those, more than 80 per cent agree that if global agreement cannot be reached - an FTT should, initially, be implemented in just the EU. Support for an FTT, in the UK, is 65 per cent. Another survey published earlier by YouGov
suggests that more than four out of five people in the UK, France, Germany, Spain and Italy think the financial sector has a responsibility to help repair the damage caused by the economic crisis. The poll also indicated strong support for an FTT among supporters of all the three main UK political parties.
Despite the arguments that a EU only FTT tax would hurt Great Britian, other 2011 polls have suggested about two thirds of the British public support the Robin Hood tax campaign.
Financial transaction tax
A financial transaction tax is a tax placed on a specific type of financial transaction for a specific purpose.This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. However, it is not a taxing of the financial institutions themselves...
es (FTT) , proposed by a campaigning group of civil society NGOs
Non-governmental organization
A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...
. Campaigners have suggested the tax could be implemented globally, regionally or unilaterally by individual nations. Conceptually similar to the Tobin tax
Tobin tax
A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another...
, it would affect a wider range of asset classes including the purchase and sale of stocks, bonds, commodities, unit trusts, mutual funds, and derivatives such as futures and options. The Tobin tax
Tobin tax
A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another...
was proposed for foreign currency exchange only.
A UK based global campaign for the Robin Hood tax was launched on 10 February 2010 and is being run by a coalition of over 50 charities and organizations, including Christian Aid
Christian Aid
Christian Aid is the official relief and development agency of 40 British and Irish churches and works to support sustainable development, alleviate poverty, support civil society and provide disaster relief in South America, the Caribbean, the Middle East, Africa and Asia...
, Comic Relief
Comic Relief
Comic Relief is an operating British charity, founded in 1985 by the comedy scriptwriter Richard Curtis and comedian Lenny Henry in response to famine in Ethiopia. The highlight of Comic Relief's appeal is Red Nose Day, a biennial telethon held in March, alternating with sister project Sport Relief...
and UNICEF. The UK government published a response favouring instead bank levies and a financial activities tax, citing the International Monetary Fund's report to the June 2010 G20 meeting, "A Fair and Substantial Contribution by the Financial Sector". The Robin Hood tax campaign also supports both a Bank levy and a Financial Activity Tax, saying they are agnostic about the chosen mechanism providing it involves a sizable transfer of wealth from the financial sector to the needy. However most of their campaigning efforts have focussed on the FTT variant.
By autumn 2011 the Robin Hood campaign had gained considerable extra momentum and support from prominent opinion formers, with a proposal from the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
to implement an FTT tax at EU level
European Union financial transaction tax
The European Union financial transaction tax is a proposal made by the European Commission to introduce a financial transaction tax within the 27 member states of the European Union by 2014...
set to enter the legislative pipeline. The campaign has also attracted extensive criticism, with a global implementation of the FTT tax being opposed by several G20 members at the November Summit, with several EU members also opposing a regional FTT for Europe.
Early history of the terminology
In 2001 the charity War on WantWar on Want
War on Want is an anti-poverty charity based in London, England. It seeks to highlight the needs of poverty-stricken areas around the world and lobbies governments and international agencies to tackle problems as well as raising public awareness of the concerns of developing nations while...
released The Robin Hood Tax, an earlier proposal presenting their case for a currency transaction tax
Currency transaction tax
A currency transaction tax is a tax placed on a specific type of currency transaction for a specific purpose. This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers....
. In 2008, Italian treasury minister Giulio Tremonti
Giulio Tremonti
Giulio Tremonti is an Italian politician. He served in the government of Italy as Minister of Economy and Finance under Prime Minister Silvio Berlusconi from 1994 to 1995, from 2001 to 2004, from 2005 to 2006, and from 2008 to 2011....
introduced a windfall tax on the profits of energy companies.
Mr Tremonti called the tax a "Robin Hood Tax" as it was aimed at the wealthy with revenue to be used for the benefit of poorer citizens, though unlike the tax campaigned for in 2010 it was not a transaction tax nor global nor aimed at banks.
The 2010 UK campaign
The campaign (U.S.: lobbying effort) has proposed to set taxes on a range of financial transactions - the rate would vary but would average at about 0.05%. The tax would be applied to those trading in financial products such as stocks, bonds, currencies, commodities, futures, and options. It would affect individual investors, banks, hedge funds and other financial institutions. The campaign is sponsored by various prominent charities, aiming to raise money for International development, to tackle climate change and to protect public services.The amount of money raised would depend on a number of different factors, including how many countries agree to the tax and the rate. In March 2010 the campaign's web site stated that: "$400 billion is our best estimate of what the tax will eventually raise from a range of rates on different transactions."
It has been proposed by the campaigning (lobbying) group that the money raised from this tax be split between domestic use and international aid.
In an article co-authored by one of the campaign's most prominent advocates, Comic Relief
Comic Relief
Comic Relief is an operating British charity, founded in 1985 by the comedy scriptwriter Richard Curtis and comedian Lenny Henry in response to famine in Ethiopia. The highlight of Comic Relief's appeal is Red Nose Day, a biennial telethon held in March, alternating with sister project Sport Relief...
founder Richard Curtis
Richard Curtis
Richard Whalley Anthony Curtis, CBE is a New Zealand-born British screenwriter, music producer, actor and film director, known primarily for romantic comedy films such as Four Weddings and a Funeral, Bridget Jones's Diary, Notting Hill, Love Actually and The Girl in the Café, as well as the hit...
, it was suggested that approximately 50% of funds raised would be assigned to domestic use to protect public services and for governments to tackle poverty at home. Under the proposal, international efforts to reduce global poverty would receive another 25%, and the remaining 25% would go towards helping low income countries mitigate the effects of climate change and to reduce their own emissions.
The British campaign's launch was accompanied by an online poll on the charity's web site for the public to have a say on whether they support the tax. Initially, there was an apparent backlash with what appeared to be thousands of members of the public visiting the Robin Hood Tax to vote against the idea. However on investigation it was claimed by the lobbying group that some five thousand of the "no" votes came from only two servers, one of them belonging to the investment bank Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
.
The Robin Hood tax has been supported by some 350 economists in a letter written to the G20
G-20 major economies
The Group of Twenty Finance Ministers and Central Bank Governors is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank...
, including Joseph Stiglitz and Jeffery Sachs.
Politicians supporting the tax include Angela Merkel
Angela Merkel
Angela Dorothea Merkel is the current Chancellor of Germany . Merkel, elected to the Bundestag from Mecklenburg-Vorpommern, has been the chairwoman of the Christian Democratic Union since 2000, and chairwoman of the CDU-CSU parliamentary coalition from 2002 to 2005.From 2005 to 2009 she led a...
, Nicolas Sarkozy
Nicolas Sarkozy
Nicolas Sarkozy is the 23rd and current President of the French Republic and ex officio Co-Prince of Andorra. He assumed the office on 16 May 2007 after defeating the Socialist Party candidate Ségolène Royal 10 days earlier....
and Katsuya Okada
Katsuya Okada
is a Japanese politician. A member of the House of Representatives of Japan, he is Secretary-General of the Democratic Party of Japan and was previously its President. From September 2009 to September 2010, he was Foreign Minister of Japan....
, Japan's foreign minister.
According to a press release by the lobbying organization, support has been forthcoming from the financial sector by prominent figures including George Soros
George Soros
George Soros is a Hungarian-American business magnate, investor, philosopher, and philanthropist. He is the chairman of Soros Fund Management. Soros supports progressive-liberal causes...
, Warren Buffett
Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...
and Lord Turner
Adair Turner, Baron Turner of Ecchinswell
Jonathan Adair Turner, Baron Turner of Ecchinswell is a British businessman, academic and chairman of both the Financial Services Authority and the Committee on Climate Change. He was formerly chairman of the Pensions Commission...
, chairman of the UK’s Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
.
At the February 5, 2010 G7 meeting in Canada consensus was formed for some form of tax charged against large banks to cover the cost to government of insuring banks against future crisis. G7 officials planned to seek approval from other G20 nations at the June 2010 summit before progressing towards implementation.
While the movement supporting this or similar transaction taxes is international, the use of the "Robin Hood" theme has been especially prominent in Great Britain. An early thrust of the 2010 campaign involved grass roots supporters being encouraged to lobby MPs and the British Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
for an implementation of the Robin Hood tax to be announced unilaterally as part of the UK's 24 March 2010 Budget. The British Chancellor refused to implement a Robin Hood tax, saying it would need to be co-ordinated internationally or else it would result in thousands of jobs being lost in the UK.
Another theatre for the campaign is the European Parliament, where in March 2010 a resolution was passed calling for progress to be made in identifying ways to set up a "Robin Hood" type tax.
Ongoing efforts: 2011 and later
Campaigning for the tax continued in 2011, with over 1000 economists signing a letter addressed to G20 finance ministers prior to their April 2011 meeting in Washington. Prominent signatories include Jeffery Sachs ; Nobel prize winners Joseph Stiglitz and Paul KrugmanPaul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...
; Harvard's Dani Rodrik
Dani Rodrik
Dani Rodrik is a Turkish economist and Rafiq Hariri Professor of International Political Economy at the John F. Kennedy School of Government, Harvard University, teaching in the School's MPA/ID Program. He has published widely in the areas of international economics, economic development, and...
and Cambridge's Ha-Joon Chang
Ha-Joon Chang
Ha-Joon Chang is one of the leading heterodox economists and institutional economists specialising in development economics...
. A copy of the letter was also sent to Bill Gates
Bill Gates
William Henry "Bill" Gates III is an American business magnate, investor, philanthropist, and author. Gates is the former CEO and current chairman of Microsoft, the software company he founded with Paul Allen...
, who has been commissioned by G20 chair and French president Nicolas Sarkozy
Nicolas Sarkozy
Nicolas Sarkozy is the 23rd and current President of the French Republic and ex officio Co-Prince of Andorra. He assumed the office on 16 May 2007 after defeating the Socialist Party candidate Ségolène Royal 10 days earlier....
to investigate new ways of funding the development of low income countries. The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
reported that staff from the Gates Foundation
Bill & Melinda Gates Foundation
The Bill & Melinda Gates Foundation is the largest transparently operated private foundation in the world, founded by Bill and Melinda Gates. It is "driven by the interests and passions of the Gates family"...
are also involved in international lobbying at G20 capitals.
The Robin Hood campaign has been attempting to build international public enthusiasm for the tax prior to the November G20 summit; in June the organisation reported the staging of campaigning events in 43 different countries. In late June the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
reversed its earlier opposition to the tax, proposing EU financial transaction tax
European Union financial transaction tax
The European Union financial transaction tax is a proposal made by the European Commission to introduce a financial transaction tax within the 27 member states of the European Union by 2014...
be adopted within the 27 member states of the European Union. Moves to pass the proposal through the legislative process are scheduled to commence in autumn 2011.
A European version of the tax is projected to raise up to €30bn a year. ECB
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
president Jean-Claude Trichet
Jean-Claude Trichet
Jean-Claude Trichet is a French civil servant who was the president of the European Central Bank, a position he held from 2003 to 2011. He is also a member of the Board of Directors of the Bank for International Settlements...
warned that implementing the tax could hurt Europe unless it could be rolled out globally.
In August 2011 Sarkozy and German Chancellor Angela Merkel
Angela Merkel
Angela Dorothea Merkel is the current Chancellor of Germany . Merkel, elected to the Bundestag from Mecklenburg-Vorpommern, has been the chairwoman of the Christian Democratic Union since 2000, and chairwoman of the CDU-CSU parliamentary coalition from 2002 to 2005.From 2005 to 2009 she led a...
affirmed their support for the proposed European implementation. Great Britain's prime minister David Cameron
David Cameron
David William Donald Cameron is the current Prime Minister of the United Kingdom, First Lord of the Treasury, Minister for the Civil Service and Leader of the Conservative Party. Cameron represents Witney as its Member of Parliament ....
remains opposed to the tax unless it can be implemented globally, meaning that a European implementation would likely have to be confined to the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
not the whole EU
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
.
As part of his September State of the Union speech, President of the European Commission José Manuel Barroso officially proposed an upgraded package of transaction taxes for adoption by the EU, now projected to raise up to €55bn ($75bn) per year. Also in September, Bill Gates presented his preliminary findings to the 2011 IMF & World Bank meeting
Annual Meetings of the International Monetary Fund and the World Bank Group
The IMF and World Bank meet each autumn in what is officially known as the Annual Meetings of the International Monetary Fund and the World Bank Group and each spring in the Spring Meetings of the International Monetary Fund and the World Bank Group...
in support of the Robin Hood tax. Gate's proposal is for a set of taxes which could raise between $48-250bn per year. Unlike Barrosol's proposal, Gates is advocating the tax be adopted on a G20 wide bases rather than for just the EU, and Gate's plan is geared more towards raising funds for aid and development rather than for regular public spending and repairing government finances. Various British business, banks and economists such as Howard Davies
Howard Davies
Howard Davies is the name of:* Howard Davies , Wales rugby union international* Sir Howard Davies , Former Director of the London School of Economics and former British financial regulator...
have attacked the EU proposal saying it would be bad for growth and would harm the economy. Mark Lawson
Mark Lawson
Mark Gerard Lawson is an English journalist, broadcaster and author.-Life and career:Born in Hendon, London, Lawson was raised in Yorkshire and is a Leeds United fan. He was educated at St Columba's College in St Albans and took a degree in English at University College London, where his lecturers...
for the Robin Hood campaign responded to developments by saying "Game on!".
In October, Adbusters
AdBusters
The Adbusters Media Foundation is a Canadian-based not-for-profit, anti-consumerist, pro-environment organization founded in 1989 by Kalle Lasn and Bill Schmalz in Vancouver, British Columbia...
, the organization responsible for sparking the Occupy movement , called for a global march in support of the Robin Hood tax, to take place on October 29th just before the 2011 G20 leaders summit.
Marches did not occur in all "occupied" cities, but events involving several hundred protesters did take place at locations including Washington DC , Vancouver
Vancouver
Vancouver is a coastal seaport city on the mainland of British Columbia, Canada. It is the hub of Greater Vancouver, which, with over 2.3 million residents, is the third most populous metropolitan area in the country,...
and Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
.
Also in October the Robin Hood tax was endorsed by His Holy Father the Pope
Pope Benedict XVI
Benedict XVI is the 265th and current Pope, by virtue of his office of Bishop of Rome, the Sovereign of the Vatican City State and the leader of the Catholic Church as well as the other 22 sui iuris Eastern Catholic Churches in full communion with the Holy See...
. In November, Rowan Williams the Archbishop of Canterbury
Archbishop of Canterbury
The Archbishop of Canterbury is the senior bishop and principal leader of the Church of England, the symbolic head of the worldwide Anglican Communion, and the diocesan bishop of the Diocese of Canterbury. In his role as head of the Anglican Communion, the archbishop leads the third largest group...
, re-affirmed his support the Robin Hood campaign with an article in the Financial Times, saying the Vatican's strong backing for a FTT was "probably the most far-reaching" of their recent statements on reforming the International monetary system.
In November, Bill Gates presented his report to the 2011 G-20 Cannes summit
2011 G-20 Cannes summit
The 2011 G-20 Cannes Summit is the sixth meeting of the G-20 heads of government in a series of on-going discussions about financial markets and the world economy....
, saying that a FTT tax could be an effective way to raise funds to tackle poverty in the developing world. However Gates also told the Financial Times that an FTT was only one option among many, admitting that in his opinion it was less important than tobacco and fuel taxes
Fuel tax
A fuel tax is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation...
. At the G20 Summit there was strong support for the Robin Hood tax from Germany and France but opposition from other members including the US, Canada and Australia.
A few days after the G20 Summit, European finance leaders debated the possible introduction of a regional FTT tax. Again there was strong support from Germany and France but also from Austria, Belgium, Greece, Finland, Luxembourg, Spain, Portugal, while strong opposition comes from Britain, Sweden, Denmark, the Czech Republic, Romania and Bulgaria, with some members being skeptical especially about the value of implementing an FTT without including at least all 27 EU states. As European Union members remain devided over the issue, advocates of the FTT have said it could be implemented only within the eurozone, excluding countries like Sweden and the United Kingdom.
Celebrity involvement
The campaign involves a fictional film made by Richard CurtisRichard Curtis
Richard Whalley Anthony Curtis, CBE is a New Zealand-born British screenwriter, music producer, actor and film director, known primarily for romantic comedy films such as Four Weddings and a Funeral, Bridget Jones's Diary, Notting Hill, Love Actually and The Girl in the Café, as well as the hit...
and starring Bill Nighy
Bill Nighy
William Francis "Bill" Nighy is an English actor and comedian. He worked in theatre and television before his first cinema role in 1981, and made his name in television with The Men's Room in 1991, in which he played the womanizer Prof...
, in which Bill Nighy
Bill Nighy
William Francis "Bill" Nighy is an English actor and comedian. He worked in theatre and television before his first cinema role in 1981, and made his name in television with The Men's Room in 1991, in which he played the womanizer Prof...
plays a banker who is being questioned about the Robin Hood tax. He eventually admits that the tax would be a good idea and would not be too damaging to the financial sector.
Comparison with the Tobin Tax
As of November 2011, the term "Tobin tax" is often used as a synonym for the Robin Hood tax. The Robin Hood FTT variant is similar to the original Tobin taxTobin tax
A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another...
proposal but would apply to a broader set of financial sector transactions. Tobin suggested a form of currency transaction tax
Currency transaction tax
A currency transaction tax is a tax placed on a specific type of currency transaction for a specific purpose. This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers....
. This is a type of financial transaction tax
Financial transaction tax
A financial transaction tax is a tax placed on a specific type of financial transaction for a specific purpose.This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. However, it is not a taxing of the financial institutions themselves...
, which taxes specific types of currency transaction. This term has been most commonly associated with the financial sector, as opposed to consumption tax
Consumption tax
A consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a sales tax or a value added tax...
es paid by consumers.
Another difference between the Robin Hood FTT and the Tobin Tax is that the Tobin Tax was intended primarily to stabilize the economic market rather than generate revenue. Economists and analysts are now divided as to whether a small transaction tax would have a significant braking effect on the velocity of trades. According to the campaigning organization, the Robin Hood Tax campaign presents the raising of revenue for domestic use and to fund international aid as a leading aim.
Evaluation and reception of the Robin Hood tax
Despite the early support for the FTT variant by leading statesmen such as Gordon Brown, by March 2010 The Financial Times had reported the international consensus now favoured a straight-forward levy against various bank assets rather than a financial transaction tax.After the June 2010 G20 meeting of finance ministers in Busan
Busan
Busan , formerly spelled Pusan is South Korea's second largest metropolis after Seoul, with a population of around 3.6 million. The Metropolitan area population is 4,399,515 as of 2010. It is the largest port city in South Korea and the fifth largest port in the world...
, the G20 were no longer agreed even for the less radical global bank levy, with opposition led by Canada and Australia. Officials from EU, USA and UK said they were still planning to implement levies on their own banks, although the tax would likely be at a lower rate now to limit the risk of banks moving to jurisdictions that aren't planning on implementing the levy. Following on from the Pusan meeting but prior to the main 2010 G-20 Toronto summit
2010 G-20 Toronto summit
The 2010 G-20 Toronto summit was the fourth meeting of the G-20 heads of government, in discussion of the global financial system and the world economy, which took place at the Metro Toronto Convention Centre in Toronto, Ontario, Canada, during June 26–27, 2010...
, the European Union president Herman Van Rompuy
Herman Van Rompuy
Herman Achille Van Rompuy is the first long-term and full-time President of the European Council...
announced that the EU had a common position in favour of both a Robin Hood style transaction tax and a bank levy which they would push for at the G20 gathering. However, according to the Canadian Embassy Newspaper
Embassy Newsweekly
Embassy Newsweekly , also known as Embassy Newspaper and Embassy - Diplomacy This Week is a Canadian weekly publication focused on foreign policy and international affairs. The publication reports a readership of over 60,000. It is the Wednesday edition of The Hill Times newspaper.-External links:**...
there were divisions within the EU with some member countries such as the Czech Republic
Czech Republic
The Czech Republic is a landlocked country in Central Europe. The country is bordered by Poland to the northeast, Slovakia to the east, Austria to the south, and Germany to the west and northwest....
against any form of bank tax.
No consensus for the tax emerged from the 2010 G20 summit. Prior to the 2011 G20 Summit in November, the Robin Hood campaign had became even more prominent, though it also provoked dozens of critical articles. Again it failed to achieve consensus at the 2011 summit.
General Criticism
The proposed FTT could reduce the total volume traded in financial products, with negative consequences for employment. While this may reduce employment in brokerages and other areas of the securities industry, a further consequence could be unemployment outside of the financial sector. Schwabish (2005) examined the potential effects of introducing a stock transaction (or "transfer") tax in a single city (New York) on employment not only in the securities industry, but also in the supporting industries. A financial transactions tax could lead to job losses also in non-financial sectors of the economy through the so called multiplier effect forwarding in a magnified form any taxes imposed on Wall Street employees through their reduced demand to their suppliers and supporting industries. The author estimated the ratios of financial- to non-financial job losses of between 10:1 to 10:4, that is "a 10 percent decrease in securities industry employment would depress employment in the retail, services, and restaurant sectors by more than 1 percent; in the business services sector by about 4 percent; and in total private jobs by about 1 percent."Other unintended consquences of an FTT could include a reduction in professional market participants such as market makers who stand ready to buy or sell at prevailing prices. This could impact the orderly and efficient operation of markets, including the price discovery process. It has been suggested that such reforms could lead to reduced liquidity, wider bid / offer spreads, and greater volatility.
According to the United States Chamber of Commerce
United States Chamber of Commerce
The United States Chamber of Commerce is an American lobbying group representing the interests of many businesses and trade associations. It is not an agency of the United States government....
, the tax could double the cost of certain financial transactions and could cause the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
to fall by 12.5%.
Mike Devereux, director of the Centre for Business Taxation at Oxford University,
has argued the tax would effectively be a stealth tax as the banks would pass all costs on to their customers, with no guaranteed transparency about who exactly would bear the costs.
Economics writer Tim Worstall
Tim Worstall
Tim Worstall is an English writer and blogger, who writes about a variety of topics, but particularly about economics. In his day job, he works as a consultant and dealer in scandium and other exotic metals...
has made similar arguments, stating the tax would ultimately be paid not by the banks but by ordinary consumers and workers. Worstall also argues that overall an FTT tax would reduce tax revenue, so would fail to help provide extra money for helping the poor.
In 2011 Oxfam
Oxfam
Oxfam is an international confederation of 15 organizations working in 98 countries worldwide to find lasting solutions to poverty and related injustice around the world. In all Oxfam’s actions, the ultimate goal is to enable people to exercise their rights and manage their own lives...
banned a pensioner from one of its stores as he was incensed by the organization's support for the tax, feeling that it could reduce the income of small time pensioners and shareholders like himself.
Criticism against implementation at national or regional level only
If implemented just at EU level rather than globally, critics has stated the negative consequences would be felt disproportionately in Britain, with economists such as Tim CongdonTim Congdon
Tim G. Congdon CBE ) is an economist, educated at Colchester Royal Grammar School and St. John's and Nuffield colleges at the University of Oxford, with a long record of commenting on public policy issues, including writing sympathetically about the monetarist approach to macroeconomic policy...
estimating an FTT could result in over 100,000 job losses from London's financial sector.
Andrew Tyrie
Andrew Tyrie
Andrew Guy Tyrie is a Conservative Party politician in the United Kingdom. He is the Member of Parliament for Chichester, and was first elected in the 1997 general election...
, Chairman of the UK Treasury Select Committee, has listed 17 problems with the FTT tax including a loss of overall tax revenue for Britain. Critics have conceded that the FTT would reduce the overall volumne of transactions especially those originating from High-frequency trading
High-frequency trading
High-frequency trading is the use of sophisticated technological tools to trade securities like stocks or options, and is typically characterized by several distinguishing features:...
, but deny that it would reduce the risk of further crises in the financial sector.
When a 0.5% financial transaction tax was implemented in Sweden, over 50% of trades in Swedish equities moved to London. On 15 April 1990, the tax on fixed-income securities was abolished. It is notable that the tax imposed an increased cost on government borrowing, and this may have influenced the decision to repeal the tax.
Public opinion
A recent EurobarometerEurobarometer
Eurobarometer is a series of surveys regularly performed on behalf of the European Commission since 1973. It produces reports of public opinion of certain issues relating to the European Union across the member states...
poll of more than 27,000 people published in January 2011 found that Europeans are strongly in favour of a financial transaction tax by a margin of 61 to 26 per cent. Of those, more than 80 per cent agree that if global agreement cannot be reached - an FTT should, initially, be implemented in just the EU. Support for an FTT, in the UK, is 65 per cent. Another survey published earlier by YouGov
YouGov
YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi...
suggests that more than four out of five people in the UK, France, Germany, Spain and Italy think the financial sector has a responsibility to help repair the damage caused by the economic crisis. The poll also indicated strong support for an FTT among supporters of all the three main UK political parties.
Despite the arguments that a EU only FTT tax would hurt Great Britian, other 2011 polls have suggested about two thirds of the British public support the Robin Hood tax campaign.
See also
- Currency transaction taxCurrency transaction taxA currency transaction tax is a tax placed on a specific type of currency transaction for a specific purpose. This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers....
- European Union financial transaction taxEuropean Union financial transaction taxThe European Union financial transaction tax is a proposal made by the European Commission to introduce a financial transaction tax within the 27 member states of the European Union by 2014...
- Robin HoodRobin HoodRobin Hood was a heroic outlaw in English folklore. A highly skilled archer and swordsman, he is known for "robbing from the rich and giving to the poor", assisted by a group of fellow outlaws known as his "Merry Men". Traditionally, Robin Hood and his men are depicted wearing Lincoln green clothes....
- Robin Hood effectRobin Hood effectThe Robin Hood effect is an economic occurrence where income is redistributed so that economic inequality is reduced. The effect is named after Robin Hood, said to have stolen from the rich to give to the poor.-Causes of a Robin Hood effect:...
- Spahn taxSpahn taxA Spahn tax is a type of currency transaction tax that is meant to be used for the purpose of controlling exchange-rate volatility. This idea was proposed by Paul Bernd Spahn in 1995.-Early history:...
- Transfer taxTransfer taxA transfer tax is a tax on the passing of title to property from one person to another.In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of...
External links
- The Robin Hood Tax organization