Changemakers, I would like to introduce you to an incendiary idea: The Robin Hood Tax.
Inspired by the actions of England’s most popular outlaw, The Robin Hood Tax’s mission is to “take from the richest in society and give to those who need it.” Rest assured, the plan is more detailed than that. The tax is imposed on banks and would give billions to tackle social issues in England and beyond.
“The tax on the financial sector has the power to raise hundreds of billions every year globally. It could give a vital boost to the NHS (National Health Service), our schools, and the fight against child poverty in the UK – as well as tackling poverty and climate change around the world.”
The Robin Hood Tax’s main proposals are as follows:
- A Financial Transaction Tax (FTT)
The best of the lot. A tiny tax of about 0.05% on transactions like stocks, bonds, foreign currency and derivatives. Could raise £250 billion a year globally, or £20 billion in the UK alone. Well-tested, cheap to implement and hard to avoid.
- A Bank Levy
Basically a flat-rate levy imposed on large financial institutions. Has potential, but the levy announced by the UK government in June 2010 misses the mark. It'll only raise £2.5 billion annually, and doesn't ringfence a penny to help the people hit hardest by the financial crisis.
- Taxing excess profits and remunerations
Not exactly sexy-sounding, but it could raise billions. Broadly equivalent to a VAT-style tax on the financial sector. Could raise as much as £3.9 billion a year in the UK alone – and up to $93 billion across the OECD countries.
Jeffrey Sachs, world-renowned economist and Director of the Earth Institute at Columbia University, has recently become involved with the Robin Hood Tax. Sachs had this to say:
“It’s fair, it’s needed, it’s vital for solving problems in the world – starting with problems with our own economy because of our budget deficits, our need for revenue. Solving problems in broken financial system which has been under-taxed and under-regulated, and solving problems for world poorest people. The revenues that will be raised by the success of [The Robin Hood Tax] will make the difference. They will be the key to the success of the Millennium Development Goals (MDGs), of the fight against poverty, hunger, and disease. Of the pathway to a world without extreme poverty.”
The Center for Economic and Policy Research (CEPR) is also in favor of such a measure. The CEPR has studied the potential impact of a financial transactions or trading taxes (FTT) and asserts that such policies raise a substantial amount of revenue, while, domestically, also reducing the size of financial trading in the U.S. economy relative to the economy’s level of productive activity.
The Robin Hood Tax may have the support of some academics, economists, and over 74,000 people online, but it also has its fair share of critics.
"Decades ago, responsible economists showed that the so-called 'Robin Hood' tax on financial institutions has no purpose other than to punish banks and provide money for certain pet projects," said John in an e-mail to FoxNews.com illustrating the failures of FTT policies. "Given that several governments have already rejected the tax, governments that do impose it will find that thousands of jobs leave their shores for more competitive countries with better fiscal policies."
Geithner argues that establishing a financial transaction tax "would raise trading costs and reduce the liquidity that benefits all investors and businesses while a bank tax could reduce the lending capacity of financial institutions, harming the ability of businesses to grow."
Whether or not financial trade taxes are a legitimate, viable option for unleashing global opportunity is up for intense debate. However, the growing demand for political responsibility and financial accountability is an absolute certainty.
Comments