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Robin Hood tax

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The Robin Hood Tax
Founded2010
FocusPolitical lobbying , marshalling grass roots support.
Location
  • Great Britain and International
Area served
International
Methodnew media, social networking and creative marketing
WebsiterobinHoodTax.org.uk
For the more general category of "financial transaction taxes", see Financial transaction tax.
For the more general category of "currency transaction taxes", see Currency transaction tax.


The Robin Hood tax is a proposed tax on Financial transactions. Similar to the Tobin tax, it aims to raise money for International development, but also to provide extra funds for governments to tackle poverty and climate change domestically. [1] [2] The campaign for the Robin Hood tax was launched on 10 February 2010 [3] and is being run by a coalition of over 50 charities and organisations, including Christian Aid , Comic Relief and UNICEF. [4]

The Campaign

The campaign has proposed to set taxes on a range of financial transactions - the rate would vary but would average at about 0.05%. [3] The tax would be applied to banks, hedge funds and other financial institutions.

The amount of money raised would depend on a number of different factors, including how many countries agree to the tax and the rate. The campaign has said, "$400 billion is our best estimate of what the tax will eventually raise from a range of rates on different transactions."[5]

It has been proposed by the coalition that the money raised from this tax be split between domestic use and international aid[6].

The campaign has arisen in the context of emerging high level support for a global tax on banks. At the February 5, 2010 G7 meeting in Canada consensus was formed for a ongoing levy charged against large banks to cover the cost to government of insuring banks against future crisis. G7 officials plan to seek approval from other G20 nations at the June 2010 summit before progressing towards implementation. [7] However the FT reports the international consensus now favours a staight-forward levy against various bank assets rather than a robin hood style transaction tax. [8]

Journalist Polly Toynbee has written about the Robin Hood tax campaign in the context of a recently re-ignited class war , which she says was started by the rich, with groups such as the Institute of Directors lobbying for heavy cuts in public spending, in taxes and in the protection given to agency workers. [1] While the campaign is international, much of the early focus has been in Great Britain, with grass roots supporters being encouraged to lobby MPs and the British Treasury for an early form of the Robin Hood tax to be announced unilaterally as part of the UK's 24th March 2010 Budget. [1]

Comparison with the Tobin Tax

Main article: Tobin Tax

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 taxes paid by consumers.

The Robin Hood tax is similar to the Tobin tax but would apply to a broader set of finacial sector transactions.

Another difference between the Robin Hood Tax and the Tobin Tax is that the Tobin Tax was intended primarily to stabilise the economic market rather than generate revenue[9] [10] . Economists and analysts are now divided as to whether a small transaction tax would have a significant braking effect on the velocity of trades. The primary objective of the Robin Hood Tax campaign is to generate revenue which could be used domestically and to fund international aid[11].

Arguments against the tax

  • Universal agreement to it is unlikely[12]
    • The Argument: It will not be possible for the tax to be implemented successfully because in order to do so it would have to be implemented universally. It is unlikely that every country would agree to the tax.
    • Counterargument: Many countries already have successful Financial Transaction Taxes. The UK's stamp duty on shares is one such tax which has been highly successful and has not stopped the market being profitable.
  • Worry that the burden of the tax will be shifted onto consumers[13]
    • The Argument: Banks and financial institutions will move the cost of the tax onto consumers
    • Counterargument: The financial sector is extremely lucrative and can afford to pay this tax from their own resources. The competitiveness of the market would act as an incentive for them to absorb the costs rather than passing them on.
  • Viability of collection[14]
    • The Argument: Even if this tax was in place, collecting it would be too difficult.
    • Counterargument: Taxes would be collected at the point where a deal was settled. As financial transactions are now computerised and automated, collecting revenue would be straightforward and inexpensive.
  • Potential damage to the finance sector.
    • The Argument: The Robin Hood Tax would hurt the finance sector. According to the United States Chamber of Commerce , the tax could double the cost of certain financial transactions; could cause the Dow Jones Industrial Average to fall by 12.5%; and has been rejected by 70% of a 800 strong sample of US voters. [15]
    • Counterargument: Concerns have been raised about the reliability polls on this topic where corporate interests are involved. Shortly after the campaign's launch, there was an apparent backlash with thousands of members of the public visiting the Robin Hood Tax to vote against the idea. However on investigation it was revealed that the "no" votes came from only two servers, one of them belonging to the investment bank Goldman Sachs.[16]


Celebrity involvement

The campaign involves a film made by Richard Curtis and staring Bill Nighy, in which Bill Nighy plays a banker who is being questioned about the Robin Hood tax[17]. He eventually admits that the tax would be a good idea and would not be too damaging to the financial sector.

Online campaign

The proposed Robin Hood tax has been accompanied by a large digital campaign. The main sources for this are:

Notes and references

  1. ^ a b c Polly Toynbee (2010-03-13). "Bring on the Robin Hood tax". The Guardian . Retrieved 2010-03-19.
  2. ^ Jeffery Sachs (2010-03-18). "Robin Hood tax's time has come". The Guardian. Retrieved 2010-03-19.
  3. ^ a b Kylie MacLellan and Ron Askew (2010-02-10). ""Robin Hood" tax campaign launched". Reuters. Retrieved 2010-03-19.
  4. ^ page on the coalitions web site showing the full membership
  5. ^ FAQ: But where exactly will this money come from?
  6. ^ FAQ: How would you spend the Robin Hood Tax?
  7. ^ Anna Fifield (2010-02-06). "G7 warms to idea of bank levy". The Financial Times. Retrieved 2010-03-19.
  8. ^ Brown retreats on ‘Robin Hood tax’ (2010-03-10). "Brown retreats on 'Robin Hood tax'". The Financial Times. Retrieved 2010-03-19.
  9. ^ Tobin's concept
  10. ^ Though raising revenue for international development was part of Tobins original plan as a secondary objective
  11. ^ How it works
  12. ^ FAQ: Don’t all countries have to implement a Robin Hood Tax at once for it to work?
  13. ^ FAQ: But won’t the costs be passed on to us anyway?
  14. ^ FAQ: Is a Robin Hood Tax practical? How would it be collected?
  15. ^ Andrew Clark in NY (2010-03-11). "US chamber of commerce slams Tobin tax proposals". The Guardian . Retrieved 2010-03-19.
  16. ^ Heather Stewart (2010-02-11). "Goldman Sachs, Goldman Sachs, clicking in the votes?". The Guardian. Retrieved 2010-03-19.
  17. ^ Robin Hood tax homepage with film
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