The Robin Hood Tax

Please watch, and then sign.

See also letter in The Guardian:

We propose a Robin Hood (Tobin) tax – a tiny tax on some banking transactions that would bolster crucial public services in the UK, save lives and reduce poverty overseas, and help pay the bill for tackling climate change. To achieve these things requires innovative solutions that are fair, feasible and financially sound. The Robin Hood tax is a tiny tax of an average of 0.05% on certain bank transactions, just 50p on every £1,000 traded. It would apply only to speculative trading, not high-street banking, and internationally it could raise as much as £250bn a year.

We believe the banks, which had a large role in causing the economic crisis, should do more than just pay back the bailouts – or insure against future crises. It is time for a new, practical contract with banks to improve the society they serve. We are confident the Robin Hood tax is based on sound economic ­foundations. A growing number of economists, journalists and politicians are now speaking out in its support. Of course it would be complex – but they believe a version of it can work and that it is a progressive and sustainable source of funds that won’t unduly harm the ­financial sector.

David T adds:

Here is Oliver Kamm’s counter-argument. In a nutshell, there are problems with banks, but a Tobin Tax won’t fix them:

In short, Turner’s recommendations will not work. He acknowledges that a tax on financial transactions, if it is to work, needs to be applied globally. Otherwise traders would easily avoid it by booking the deals in other financial centres. It would also need to apply to all financial transactions, lest traders merely reclassify one type of deal (say, foreign exchange) as something else. Yet even if the main financial centres were to apply a tax consistently, what incentive would offshore tax havens have to follow suit? A small tax, inevitably inconsistently applied, would hardly disrupt financial markets, but there there is still a risk of creating distortions in the market. In 1989, there was a proposal in the US Senate to tax securities trading, under the tendentious title: “The Excessive Churning and Speculation Act.” In opposing it, the Chicago economist Merton Miller made the point that transactions taxes, even at apparently low rates, can have far-reaching consequences. He cited a type of security known as a “letter stock,” which traded 20 or even 30 per cent below ordinary shares in the same company. Imagine that sort of anomaly on a market-wide scale: it would create a huge new class of arbitrageurs seeking to exploit such price discrepancies. That is obviously not the way to encourage global financial stability.