What do we think about the Tobin tax ('Robin Hood tax') then?

[PollyTroll]

Explanation here

Bill Nighy/Richard Curtis video here

silly answer. i vote for it if all politicians start wearing tights and pointy up toes. even the women who already do.

less silly answer that proves i'm not stuck in the house bored witless: i can't help feel that creaming a bit of the lush stuff off a sick system is corrective enough to it. sounds like leeching* or bleeding in medicine used to be. kept the doctors busy and everyone feeling as though Something Had Been Done.

*yes I know it is actually proven useful in a few narrow applications.

ISN'T corrective enough.
sorry
just up from one of those unpleasant daytime naps you have to have after months of extreme early waking.

Bleurgh, I hate that feeling Merry.

Maybe not a good enough corrective to the system - but a good enough way of raising money for vital causes?

"and if they are in any way intelligent, make a profit on them."

Hmmm, I won't hold my breath waiting for the profits to start rolling in given what happened to our gold reserves....

There's no way this tax is enforceable globally. It may work within the EU but then that's just another nail in the coffin of European competitiveness.

Why are Asian countries going to say yes to this? It's just not in their interests. If Asia (esp China)doesn't, the US won't.

Edam- it would be fine becoming less dependent on the financial services industry if we had anything else to compete in. What do you suggest? Steel, coal, textiles, autos? Um, no, thought not.

Green technology? Just a suggestion

Why does the Uk have a competitive advantage in green technology? We don't have the engineers for one thing, or the advantage in raw materials.

The majority of green energy technology is currently dominated by the Germans and Scandanavians (and of course the US).

I'm not trying to be facetious, and I agree that a more diversified economy is ideal, but the issue is that we struggle to find areas in which we can compete on a global level (i.e. we need something we can sell to another country)and we dont have the domestic demand to be self contained.

Tis rather pie in the sky. Would cost too much to gather and enforce than it would raise in revenue. Disputes would be costly in terms of inter-country cooperation and it would be managed badly -- almost a guarantee I reckon.

Would China and Russia go for this?

arcticfox - so what, we just let the City carry on as before? There's a reason we have little heavy industry left, and the City played a large part in those decisions. As a country, we desperately need to diversify, and stop our politicians kow-towing to the City. Let's run the economy in favour of the actual economy, not just the City at expense of everything else.

I help to design tax systems for a living; my particular interest is in how tax systems encourage tax payer behaviour (both positive and dysfunctional).

Personally, I think a Tobin tax can't be designed well enough to prevent the banks simply transferring activity from taxable transactions to non-taxable ones - even if every nation in the world signed up for it, and I agree that some key ones wouldn't.

If we collectively think that banks should pay some form of additional tax over and above mainstream corporate tax, then I would favour an Obama-style tax on bank's assets.

Just in response to Probono, it would actually be really easy to enforce as all transactions are computerised on a global system... tax would just be taken at that point.

Growingweeble - certainly agree with that - it would be collected electronically just as Stamp Duty Reserve Tax is collected via CREST. It's by far the most efficient collection mechanism for HMRC.

Most taxes are a bad thing and you save a lot of wasted effort on avoidance if you get rid of tax and let markets work freely.

I think it's a really good thing this country has clean industries rather than the mines etc where so many of our ancestors died. I'd far rather my children worked in a call centre than underground.

So what we need is to make London the best environment on earth in terms of low tax and stability to ensure people flock here. We are doing the exact opposite of what is needed to achieve that now. The result will be making the poor poorer in the UK. The rich can look after themselves.

It'll just filter down, surely?

So it's actually another tax on us, regardless, isn't it?

No. No. No and No!

Agree with Xenia on this.

Also, there is a reason wealthy people are wealthy and it's not because they are to dumb to avoid taxation stealth or explicit.

Edam- are you smoking? The City "caused" the decline of Britain's heavy industry? Maybe you should consult a history book.

The City of London did not become prominent as a financial centre to rival New York until the mid 1980's.

Britain's heavy industry was screwed way before then. By 1983, it was cheaper to mine and ship a tonne of coal from Australia to the Uk than to mine it in Yorkshire. This is largely due to the obstruction of the unions who refused to de-man and mechanise when they had the chance (i.e. to save some jobs by sacrificing some). Similarly, British Steel and British Leyland put the nails in their own coffins by refusing to wake up and smell the global competition, instead, relying on protectionist measures to keep them and their outdated work practices afloat. If a Japanese dude can make a family saloon better and cheaper than you, the city's got nothing to do with it. You're uncompetitive and you're finished.

We were never going to compete in large scale, low value add industry forever- that's the lot of the industrialising nation. Our crime is that we didnt adapt to changes in global competition- instead the Unions stuck their heads in the sand and hoped the government would stick on some import taxes to save them.

Btw, I don't agree that the city should carry on as before. I totally agree with you that we need a more diversified economy. It's a big problem. The City has acted as a massive brain drain for years- why become an engineer/ doctor/ scientist when you can earn three times as much working for an IB? I just think that when you're in the middle of a desert, you don't shoot your only horse before you find another one.

I work for Oxfam and was in Malawi with Carrie last week. (Oxfam is part of the coalition backing the Robin Hood Tax) It isn't really as complicated as it sounds, a tiny tax on banks' financial transactions which could be the answer to tackling poverty, both in developing countries and in the UK. What we are asking is that the banks help to repair the human damage which was caused by the global economic crisis.

From what we saw in Malawi last week, the money raised could be the solution to pay for the training of midwives desperately needed, for improving the facilities at rural clinics and providing ambulances.

It is vital that schools and hospitals here and in poor countries that are under threat of cuts because of the financial crisis are protected and this would be a way of paying for it without any cost for the public.

Let me know if I can answer any complex questions you have, as I'm just off to meet Robin and his merry men.

Just a couple of things- the value they are proposing 0.05% on transactions - rather than 0.5% is really small - so shouldn't stop transactions.The original Tobin tax proposal was set at a higher rate
Its a bit unclear to me whether it is to raise money for the poor (eg robin hood) or to punish the banks.
It really needs to be global - and to be based on the nature of the transaction rather than the nature of the institution - otherwise it is easily avoidable and (if big enough) will just lead to banks moving the basis of their transaction.
Also most transaction by banks are dome on behalf of clients so they could just pass on this to the clients( corporates, pension funds etc)- which would trickle down to the consumer

I am not against it in principle- I think it should be targeted at transcation/types of business that are benefiting from the government guarantee

"to punish the banks."

It's such a teeny tiny proportion of what the banks make, I don't see how it's punishing the banks. Does it matter anyway? If taking money from the banks is automatically punishing them whether the ultimate aim is redistribute some of the enormous sums they make, then I don't think that matters. It's tough tits, I"m afraid. The tax payer faces punishing bail outs after all.

Goldman Sachs doing their God's work

I just think you need to be clear of the objective- if its to punish the banks- it doesn't, if its to stop the banks taking on risk- it doesn't, if its to make the banks pay back for the bail out- it doesn't
if its a tax to raise money for the poor - it probbaly does (in a small way)- but then why just banks?

Just saying its tough tits doesn't really advance any argument

OxfamHealth - it would be great if you could address some of the objections that have been raised on this thread:

1. That the cost of this tax would be passed on to consumers;
2. That it would be costly and complex to administer (although Cinnabar and weeble have said here that the computerised systems used to collect stamp duty on transactions would be easily extended). Is there any detail about how the proposed tax would be collected?;
3. That it would make the market more volatile (as per Owen Barder's blog, linked to earlier in the thread);
4. What are the chances of China coming in on this?

You'll see from the responses on this thread that people aren't worried that it's a complex idea - they're worried that it wouldn't work.

it is not punishing the banks

it is playing fair

it is making the banks have a TINY bit (0.05 % fgs) of social responsibility.

The only problem I see is that it is a stupidly tiny sum

Of course it's a good idea, in theory.

But bottom line is Banks Never Lose.

We will end up funding it one way or another....

(TAKE a TINY bit (0.05 % fgs) of social responsibility, even)