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

[PollyTroll]

Explanation here

Bill Nighy/Richard Curtis video here

complex - but pointless.

not well thought out, if perhaps well-intentioned - banks just factor this into their bottom line - companies and individuals that borrow from them pay higher fees. they pay their employees less.

bankng profits will, sooner or later, compensate the taxpayer many fold...(from those invested in by the exchequer)

and as someone pointed out - it would ned to be global. if non-global - it would drive investment funds away.

Well done, Sir Richard.
Another wealthy celebrity gives up his valuable time to devise another new way for ordinary folk to cough up money...
Bet this went down really well with the luvvies.

It was 0.05 or 0.005% of the bank's transactions (though not the ones with the general public), sorry can't remember which, but it produced Billions of pounds sterling which could be put to good use.

The Tobin tax, as it's known, is a complicated but respectable idea that has been around for a long time. It has gathered a head of steam as a result of the financial crisis and is now supported by many governments and financial system insiders - e.g. Angela Merkel, Paul Volcker (Obama's chief adviser on financial reform). In the UK, Adair Turner and a number of other prominent economists are supporters. The 'slebs are just jumping on the bandwagon, by no means driving it.

It's a tax levied on transactions between banks, it has nothing to do with individuals, pensions, companies, bank accounts etc, so banks would not automatically be able to pass the costs onto the general public without a lot of fancy footwork. There is still a lot of discussion to be had about how to implement it without loopholes.

The idea is to reduce what Adair Turner has called "socially useless" types of short-term trading, specifically currency speculation, which damages the economies of developing countries (and developed ones too - it was currency speculation wot did for Britain in 1992 - remember Black Wednesday?)

It would certainly put some city traders out of a job, but there's no consensus it would have negative effects on the real economy at large (ie business growth, jobs, wages etc). Possibly you might worry if you run a Porsche dealership or are a City-based cocaine dealer

Don't agree and I suspect it won't be adopted anyway so we don't need to worry about it.

If a bank pays more tax it has less money. It doesn't matter how you phrase thigns so as not to be passed down someone will pay and someone will cream off money meant for good causes to line their own pockets. It will not be well spent and in the end the poor will be the losers.

Well the banks were absolutely rolling in money as a result of the deregulation of the last two decades, which allowed them to do pretty much whatever they wanted whilst paying hardly any tax.

And we're all doing really, really well now, aren't we? Clearly the banks had our best interests in mind all along

Thanks to Sarah/Oxfam and theboobmeister for responding to some of the criticisms.

what Xenia says is 100% true though - banks are profit-driven - they don't make things, they just make money. money not being made in one sector will be compensated for by making more in another - its really easy for a bank to do this.

All they have to say is 'our profits from X will be lower than expected - so lets see if we can increase charging in some way to make it up)

trust me, i work for a bank it's exactly how they work.

Why on earth are we all so accepting of this sort of behaviour from banks? Yes, that is exactly how they have worked during the past two decades, because regulators have allowed them to. But that doesn't mean they should carry on working like that. We live in a democracy - isn't it up to us to say what sort of society and economic system we want? If the political will is there then effective regulation is possible, even if it turns out to take a different shape to the Tobin tax.

We have all been hoodwinked by the free market fundamentalists into believing that any restriction on banks' activities would mean the end of capitalism. Result? The biggest crash since the Great Depression, some of the most financially volatile decades on record. The financial services industry has been allowed to grow to a ludicrously bloated proportion of Britain's economy, crowding out investment which could have gone into any number of more productive activities (green energy, for example). How is that natural or desirable?

The fundamentalists have been proved wrong and must now be dethroned.

I don't think anyone is saying that restrictions will bring down capitalism - quite the opposite -the banks will simply respond to any attempted restrictions/taxes like the capitalist institutions they are, by protecting themselves and passing the cost.

Yes but you are also just accepting this idea that the banks are all-powerful, can out-lobby, sidestep or ignore any restriction on the free movement of capital.

Not true. There are several pieces of key deregulation which allowed them to act like this (for example, the repeal of Glass-Steagall). Governments are more than capable of putting these restrictions back in place, and extending them to new areas which managed to escape regulation in the first place.

Markets always run in cycles. That doesn't mean capitalism doesn't work. Cycles are just corrections. Just like our lives are cycles and indeed as women we have monthly cycles. It doesn't mean something is wrong just because we're in a down or on an up.

I don't want to live in a society where commercial businesses are not allowed to operate in a manner to maximise their profits. It's bodies that don't make profits which do things badly.

Green energy? That's a massive con. People to go and do some research on some of these thigns. They just get taken in my propaganda which is thrust on them. Some of the best/worst corruption and creaming off is done by those in the supposedly environmental sector. At least the banks are honest about their motives. 30 % of retail bank profits are made from charges. I like that. It means those who breach their contracts and overdraw provide me with 100% free banking. Keep it up.

Who said that capitalism doesn't work? Not me. So you think that this massive global recession is the essence of capitalism? This is normal, we have to learn to live with it - or else go live in Cuba?

Your argument is ridiculous. This recession is bad for all capitalists, particularly for commercial businesses which wish to make profits. Those who are still keeping their heads above water are unable to borrow money to fund expansion, because the stupid banks are having to shrink their loan books as a result of their own idiotic actions. A significant number of profitable businesses have also been driven into insolvency by banks calling in their loans prematurely.

A boom-and-bust economic system that is prone to extreme volatility is no good for anyone's business. It's neither an efficient nor an inevitable form of capitalism.

I think the tax is a very good idea - and I think the person who says there should be no tax system at all is an utter fool and hideously selfish to boot.

What kind of horrible place would this country be if we didn't have a tax system to fund all the things that make life bearable - the NHS, schools, refuse collection - oh and libraries. Because you know what 'Xenia' the Internet is not actually a substitute for the library service.

Vote for the tax - you know it makes sense!

We've always had it. I was reading my grandmother's letters to relatives in Canada in the 1920s after the other crash. I think we just have cycles, economic cycles. When have we not had them? Perhaps it's just natural, like cycles of the moon etc.

I don't see much support growing for this tax so I don't think I need to worry too much about it but we'll see.

Once there were people who hated the thought of women having the vote or working class people being able to own a house ...

Xenia I suspect you are actually a hideous man like Paul Dacre or a vile Tory MP or someone.

Why are you exercised by the thought that people would actually have an altruistic opinion? You seem very threatened by that.

LOL! - can't see Paul Dacre or a Tory MP comparing the biggest global downturn since 1927 to "women's monthly cycles", somehow ...

In any case Xenia's views on economics would appear to put her in the extreme libertarian camp. When they start raising the banks' capital requirements she'll escape to a Colorado mountain with 20 years' supply of tinned food and a gun

I didn't think she was comparing the economic situation to women's monthly cycles. 'She' is even more stupid than I thought ...!

1)in order to work, it must be multi-national
2)the USA is not keen

therefore 3) it is not going to happen, or if the UK tries it alone, it won't work.

so all fresh air thinking, IMO...

Totally in favour.

It's a really really bad idea.

The banking sector's profits in 2006 were just under $800bn. The organisers of the Robin Hood tax say that they could raise $400bn annually. So we have to imagine the global banking sector would happily offer up more than half of all profits, and NOT pass additional costs onto their customers. They won't, and this tax relies on every bank in every country agreeing to it.

Added to this is the fact that a decent proportion of transactions have a profit margin around the 0.05% figure the RHT is proposing to hit. The result would be that these transactions would no longer be viable, and would not take place, thus cutting the amount of money this tax could actually raise. Interestingly, this was the original idea behind the Tobin tax in the 70s, to dampen down the market in speculative trading by making it uneconomical to do.

There is no actual discussion on how the 'high-value' trades to be taxed would be split off from the smaller-value transactions that many of us make on a regular basis. Not good news for people who are worried about pensions (stocks and shares) and buying foreign currency.

The final nails in the coffin for me, though, aren't strictly economic ones. When this tax is being proposed by celebrities who I am sure have all benefited from off-shoring of assets, and is to be used on increased public spending rather than cutting the defecit and getting us out of recession earlier, it's a bit of a non-starter...

Oh, and didn't Robin Hood fight AGAINST taxation?

btw - theboobmeister is exactly right with their summary of the Tobin tax, and what it was for.

"The idea is to reduce what Adair Turner has called "socially useless" types of short-term trading, specifically currency speculation, which damages the economies of developing countries (and developed ones too - it was currency speculation wot did for Britain in 1992 - remember Black Wednesday?)"

Surely a tax which exists to stop the very activity on which it relies for income can't be seen as a big revenue generator, let alone $400bn a year?

Missing, the RHT people seem to be stressing that the proposed tax differs from Tobin's proposal, in that it's not an attempt to put a brake on speculative trades; it's just a progressive tax to fill funding holes.

PollyTroll, you're quite right that they're stressing the differences.

The problem is that their proposed actions make it exactly like a Tobin tax. By placing an additional tax on transactions, rather than profits, they will make those transactions uneconomical. This will result in fewer transactions, and thus create exactly the result Professor Tobin was trying to achieve when he originally voiced his idea.

As for filling funding holes, as far as I am aware all political parties, in the UK and abroad, continue to stress the importance of overseas aid despite their recent financial difficulties. This only leaves domestic spending, and I would argue any money that can be raised/saved should be used to pay down our huge defecits rather than on increasing public spending even further.

Very interesting. Yes, there are clearly two different goals here -

1. Reducing the number of transactions, in order to damp down the pernicious effects of currency speculation on developing economies
2. Raising money for good causes by taxing a wealthy group which just happens to be extremely unpopular at the moment (always handy ... )

Missing is absolutely right about the contradiction between these two things - it's like taxing tobacco, the aim is to reduce your tax takings through people giving up smoking. Personally I'm in favour of the Tobin tax for the first reason only - although accept that it is unlikely to happen because of the difficulties of global implementation.