The Robin Hood Tax

That’s what my Labour regional colleague Glenis Willmott MEP calls the EU’s proposed “Financial Transaction Tax” (FTT).  It perfectly fits the Labour narrative.  The economic crisis was caused by fat-cat bankers, but the costs are borne by the long-suffering poor.  It’s time to get our own back.  Let’s stick it to the fat cats, and charge them 0.1% on each and every transaction.  That’s a tiny percentage.  It’s almost like free money.  And it’ll raise £50 billion, which we can spend on the poor and disadvantaged.  No more cuts.  Problem solved.
Glenis’s Robin Hood tax, in the best tradition of the story, takes money from the rich and gives it to the poor.  If only.
We should note in passing that the causes of the economic crisis started not with the financial services industry, but with politicians and central bankers (it was Jimmy Carter and Bill Clinton who got Fannie Mae and Freddie Mac offering mortgages to borrowers who’d never repay).  Certainly bankers made unwise decisions, but we can’t blame the fish for the water they swim in.
And Glenis’s plan is so much wishful thinking.  The idea of an FTT, or “Tobin Tax”, was actually tried in Sweden.  And failed.   The main effect was to drive financial companies off-shore.  These businesses are very easy to move.  Transactions take place in effect on the internet.  So you can do it in Zurich or Chicago or Hong Kong just as easily as in London.  This is why Conservatives say, quite rightly, that we should only introduce it if the whole world does so at the same time.  In fact there are good reasons not to do it at all.
Zero point one percent sounds almost trivial.  But £50 billion is a huge new tax burden, which will depress growth and undermine competitiveness.
It’s not really a Robin Hood Tax.  It’s a Sherriff of Nottingham Tax.  It’s not taking money from fat cats and giving it to the poor.  It’s taking money from old ladies’ pension funds and giving it to the robber barons in Brussels.  Don’t imagine for a moment that this money would be spent on good causes at home.  The leaders of the EU are salivating at the idea of this huge sum out of nowhere, as it were, which they can spend on their pet projects, like their Goebbels-inspired “Museum of European History”.
It’s also an example of EU rules that sound perfectly fair and even-handed, but hit the UK far worse than other countries.  A previous EU attempt to regulate credit would have wiped out the UK’s off-set mortgage business.  On the continent, they simply didn’t have off-set mortgages to any extent, so they didn’t understand the problem.
The infamous Temporary Workers Directive hits Britain disproportionately, because we have better-developed and more flexible labour markets than those of our continental partners.
And because some 80% of EU financial transactions take place in London, we’d pay £40 billion of the planned £50 billion.  This is a dagger pointed at the heart of the City.  Or as Dan Hannan put it, “They want to bail out the euro, and they’re sticking us with the bill”.  Cameron and Osborne (who to be fair are talking tough) have a real duty to deliver a veto on this issue.  We will never forgive them otherwise.

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10 Responses to The Robin Hood Tax

  1. Alfred says:

    Don’t forget the other, and maybe more important, issue. The EU Elite are desperate to get their own tax raising powers. This is just the first attempt. If this succeeds, more direct Brussels taxes will follow.

    Wasn’t their a revolution once before, that affected us, caused by “Taxation without representation”?

  2. Mike Stallard says:

    I am totally in agreement with you on this one.

  3. Lazarus says:

    “Zero point one percent sounds almost trivial. But £50 billion is a huge new tax burden, which will depress growth and undermine competitiveness.”

    It works out about 2p a day for everyone in the country. But why do you think it is being taken from the poor? How many of the poor do you think are making the financial transactions that this tax applies to?

    But I’m confused, probably because I do not understand how this tax is supposed to work. Why is Brussels collecting it?

    I do agree with you that these businesses are very easy to move, but I thought the tax would only apply to transactions to and within this country. If that is the case what is to be gained from moving? If it isn’t, can’t it be amended so that it only applies to this countries transactions?

    • Alfred’s reply is excellent. This is a tax on anyone who has a pension, or an ISA, or an annuity, or savings. The proposed tax would apply to all transactions within the EU, and therefore financial services companies would relocate out of the EU, taking jobs and investment with them. Remember that most of these over-paid financial executives in London are paying UK income tax — and that’s a lot of money. When they move to Zurich or Hong Kong, they will no longer pay UK tax. The UK Exchequer would probably lose more than the Cpommission would gain.

  4. Alfred says:

    Lazarus said on October 7, 2011:

    “Why is Brussels collecting it?” Because it is the first direct Brussels tax that looks like it will be successful. There have been several other proposals that haven’t got very far as yet. Don’t misunderstand the desperation of the Brussels government to start their own direct taxation so that they don’t have to bother with regional governments.

    “But why do you think it is being taken from the poor?” Every one who uses a bank account will end up paying for the bank’s costs, the businesses, shops etc. All these costs get passed on downwards including those who are least able to pay.

    My son-in-law’s business, by necessity, has to use dollars at times. If that costs him more, because of this tax, then his products will be sold for more. That applies to any and every importer and we import a very large percentage of our goods.

  5. Cameron and Osborne (who to be fair are talking tough) have a real duty to deliver a veto on this issue. We will never forgive them otherwise.

    Yes they are talking tough, but you know as well as I do they won’t use our veto. The issue will be fudged, probably in the same way as the budget increase was, and they will settle for something like a 0.05% levy per transaction.

    Will you promise us that if what I suggest above comes to pass that you will resign from the Conservatives and either continue as an independent MEP or join UKIP?

    • I share your concern. But the third rule of politics (after “Don’t be photographed in a hat” and “Don’t be photographed holding a drink”) is “Don’t answer hypothetical questions”!

  6. Pingback: The Tobin Tax: Mad in its own terms « Roger Helmer MEP

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