What do you all think of the Robin Hood Tax?

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Polly Toynbee on Question Time right now advocating Robin Hood tax. Tory Minister flannelling like crazy. Says the banks will run away if we tax them - tired old argument.

The financial sector?s profits per employee are estimated to be 26 times higher than the average in other industries.

Many countries already have their own transaction taxes in place.In the UK there is FTT already ? the stamp duty on shares - which raises £3 billion a year. This hasn?t stopped the City being one of the most profitable markets in the world - or them leaving for other countries.

No Pan are the very stupid bankers not being fast tracked into teaching posts?

The Tory Minister was not saying banks would 'run away'. He was saying - and I think he's right - that if directing transactions through the UK markets started to attract a small fee each time, banks would instead direct their transactions via another financial jurisdiction that didn't charge. It's all done electronically... the bank doesn't up sticks from London and physically leave.

An example of how this works in practice. I work for an organisation that is registered as 'non-trading'. We do all the deals & the selling here in the UK but the orders, invoices & payments are processed in another EU country. (This is perfectly legal & above board) My point being that my organisation doesn't pay UK corporation tax as a result - the tax goes into the coffers of a different EU country instead.

Banks would simply do a version of the above if they were being charged extra for making transactions in the UK. It would only work if there was a 100% universal 'Robin Hood Tax'

Chil1234 is right. Also, it would affect consumers, as banks don't operate in a void. For example, If you want to insure your flat, your insurance company is not going to keep the risk of all those flats burning down or whatever on its books. So it will lay off the risk with other financial institutions or banks. The cost of doing so will now rise because of this new tax. The insurance company is not going to swallow it - it will pass it on to the person wanting insurance.

And I am bemused at the sneering about banks building up their reserves. Those reserves are there to protect deposits, and reduce the need for banks to seek bailouts. Surely that's a good thing? It seems to be a damned if you do, damned if you don't situation for banks.

"It seems to be a damned if you do, damned if you don't situation for banks."

Very true. Everyone is saying "the banks were really irresponsible- they all overlent and look what happened."

Now that the regulators are saying "Right, you've all got to improve your loan to capital ratio", everyone is saying that's bad too because it limits lending and might impact the housing market

Cant have it both ways. Do you want them to lend to everyone who asks or not?

Robin Hood tax works if all countries do it (which they wont but that's another matter) but the costs will just get passed along and crop up somewhere else, so what needs to be considered is who pays these passed along costs and does it end up being a case of rob Peter to pay Paul.

The robin hood tax is a terrible idea and will reduce market liquidity then we need it to increase considerably.

I wondered how long it would take for you to be here defending the banks huddspur.

85% of the deficit is due to the banking bailout, and as a result, public services on which vulnerable people rely are being cut to the point of not functioning.

Which do we 'need' more: the markets to increase liquidity, or our local councils maintain their ability to provide essential services? I absolutely cannot see how the financial sector can argue that it is squeezed to the hilt, and at the same time still have the capacity to continue to pay out bonuses!

Of course the Robin Hood tax would work more effectively if it were implemented world-wide. But there is compelling evidence that international movement towards greater regulation of financial services is occurring - so perhaps the UK will just be leading the way. If this doesn't happen, and a really catastrophic movement of financial industry does occur, the tax can always be rescinded.

The same argument 'it'll only work if the whole world does it, otherwise it puts GB at an economic disadvantage' was also regularly trotted out in regards to illegalising the slave trade. The UK could have taken a cowardly position on that but it lead by example.

The banking bailout did not contribute anything to the deficit. It contributed to the national debt they are not the same.
We need more market liquidity to increase the amount of many being lent because many small and medium small sized firms are being crippled by the lack of credit in the economy at the moment. We are desperate for a massive increase in the private sector so we should be trying to striving to create the conditions that allow this to occur, reducing market liquidity clearly does not help do this.

Nor does paying bankers bonuses.

Hudd is right this tax would be disastorous for the country. It would lead to less activity on capital markets and if imposed unilaterally it would drive the banks from the city of London to Frankfurt

I'm assuming this is a proposal for a Tobin tax on each financial market transaction (not clear immediately from the website)?

If so, there are definitely strong arguments for such a tax - particularly if it can be agreed and brought in at an international level (although I believe the last govt tried unsuccessfully to negotiate this).

The strong advantage I think is not so much about revenue raising (although this would obv. be useful in current circs) but in the fact that it discourages purely speculative transactions.

So for example, if you need to buy currency to complete a real world business deal, or are buying futures to insure against the risk of a business input going up in price the tiny percentage should add a negligible cost (and other business taxes should/could be reduced to compensate).

But because speculative deals (ie buying currency with the aim of making money by selling it again when the price rises) generally work on such a tiny margin, the tax should make them much less profitable.

So essentially, if you believe that speculative trading in currency/futures/etc. is a bad idea, then a tobin/robin hood tax has a lot to recommend it.

BUT unless it was introduced alongside capital controls (of the sort that were very common until the 1980s, so we're not talking revolutionary socialism here) then it is hard to see how it would work on a one country only basis.

uyter, hudd might be "right" in your opinion.

In my opinion "market liquidity" can still exist with the tiny, miniscule, let me repeat myself 0.05% tax being proposed, and the aim is for it to be global, other countries do use a tax similar to this and the banks, hedge funds etc still keep 99.95% of their profits, hardly going to break the bank?

I don't think we can impose this sort of tax on our own, to me it is a recipe it is a recipe for the exodus of banks and other financial institutions abroad which considering our dependence on this industry would be disastorous.

it's all a bit tiresome to raise up the fear of 'banks going abroad' - they can do that at any time - they follow 'hot money' which is in continual 'flow' around the world. The tax of 0.05% is utterly pathetic when compared with the benefit. Again, it is bankers holding the country to a sort of ransome - keep payin g us this obscene, and I mean obscene in all it's gory, amount of money otherwise we will leave you.

Well. Happily fuck off. It's a market. Other, hard working entrepreneurs will step in and work within the market, allowing for this teeny tax.

As someone who used to work in the city I have say I agree with Takver,Uyter and Huddspur with regards to the damage to market liquidity. I think the bank levy imposed by the Conservative-Liberal Democrat coalition is a far better way of raising tax revenue from the banks.

no beobelle - it's utter peanuts compared with what they owe to the rest of us. Damage to market liquidity is perhaps the most embarassingly weak argument. Shorely there must be a better argument you could entertain us with.

I don't see a way of extracting the amount of money that you want to from the banks without either an exodus from the City or damaging market liquidity. The threat that banks will leave is a real one, banking is the most mobile industry there is, geographical location is relatively unimportant and this country is very reliant on financial services

Brilliant idea. I signed up to it a while ago. The arguments that it will result in the banks deserting the UK is nonsense. It would cost the banks more than 0.05% to relocate.

indeed, and I, and lots of others say 'go. It's a market. You WILL be replaced, no problem.' The banking sector has become lazy and arrogant in extremis, and appears to have no shame about taking money from the public. Keeps banging on about the importance of 'free markets' then gets in need of the 'market' to be fixed...and then returns to 'free market' argument.

but we won't be meeting in agreement here, will we?

The financial services will not be easily replaced it is the biggest single sector within the private secor and generates a large proportion of GDP. The truth is we are far too over reliant on it and we need to reduce this dependence but a mass exodus due to uncomprtitive taxation is not the way to achieve this.

According to Brian Cox the UK economy benefits more from scientific research than banking, yet it would be inconceivable for the govt. to pump as much into R&D as it did into saving the banks.

So Banking is far from being the be all and end all of our economy.

Engineering and other science related industrys are important but they don't generate as much GDP as banking and financial services nor do they facilitate our economy like banks do.