Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT

A new report by Professor Avinash Persaud takes apart the “disproportionate, inconsistent and disingenuous arguments” against a Financial Transaction Tax.

The Robin Hood Tax: Taking a little from the rich to help the poor - no wonder Boris, Dave and Gideon are opposed

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By Simon Chouffot of the the Robin Hood Tax campaign

A new report (pdf) released today aims to systematically dismantle critics’ apocalyptic visions of the carnage a Financial Transaction Tax (FTT) would wreak on our economy.

Robin-Hood-TaxThe report’s author, Professor Avinash Persaud, a former head of Currency and Commodity Research at JP Morgan, says:

“What draws me to this subject is not the ‘bashing bankers’ party, but the disproportionate, inconsistent and disingenuous arguments used by my fellow bankers against this proposal.”

The report points out that the proposed FTT rate of 0.01% – 0.1% is rather modest when compared to other transaction costs such as trading commissions, fees for clearing and administration costs. An FTT would only increase transaction costs to levels seen ten years ago, when arguably the markets were more stable.

The irony is, it is often the same banks and fund managers who shout loudest about an FTT that will be skimming considerably more from each transaction in fees and charges themselves. Annual management costs can be more than ten times the proposed rate of an FTT.

Rather than heeding hypothetical scenarios we can look to examples in the real world – seven countries already raise £15.3 billion annually through long standing FTTs. Their imposition didn’t cause financial Armageddon.

One of the largest and most successful examples is right here in the UK – the stamp duty on shares that raises the government more than £3bn a year.

 


See also:

Robin Hood Tax gains momentum – on the continent 3 Jan 2012

Tories are balancing the books on the backs of the world’s poorest 2 Dec 2011

Osborne starts to panic about the chance of a Robin Hood Tax 9 Nov 2011

On the Financial Transaction Tax, why is Osborne on the side of the one per cent? 2 Nov 2011

Miliband and Balls need to be more vocal in support of the Robin Hood Tax 17 Oct 2011


 

Even if a Chinese investor uses a French bank in New York to buy a British share, they would still have to pay the tax. This means far from it leading to a loss of business in the UK, around 40% of the tax is paid by non-UK residents.

According to the report, critics’ analysis is “dangerously incomplete” since it focuses only on where the revenue is collected and not where it could be spent. An estimated £8.4bn of additional revenue in the UK could have a huge positive impact: it is enough to avoid all cuts to the education budget, halve cuts to the annual welfare budget or fund the Green Investment Bank three time over.

More fundamentally, a low-rate FTT would would help reduce ‘noise trading’ – a churning mass of short-term speculation that feeds off underlying market trends. Such trading intensifies the boom times, helping to create a mirage of value, but also helps to exacerbate the busts, when in a flash, it disappears.

Taken together, the report concludes the net effect of an FTT on UK GDP is likely to be +0.25%. Its release coincides with a European finance ministers’ meeting in Brussels today where nine European countries are again attempting to fast-track implementation of an FTT in 2012.

Banks could be forgiven for opposing an FTT since they are going to have to pay it, but in the face of growing political momentum and evidence that it would be good for Britain, the UK government’s opposition is looking increasingly untenable.

Click here to read the report in full.

 


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13 Responses to “Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT”

  1. Brian Carruthers

    RT @leftfootfwd: Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT http://t.co/UFR8KOPx

  2. Patron Press - #P2

    #UK : Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT http://t.co/bshbxeUd

  3. leftlinks

    Left Foot Forward – Report rebuts “disproportionate, inconsistent and disingenuous” attacks on… http://t.co/CS9JAjSH

  4. Simon Chouffot

    City figure takes on fellow bankers & does some straight talking on @robinhood tax. Here's my blog on @leftfootforward: http://t.co/4epVbLw3

  5. Matthew Alton

    Debunking myths about Robin Hood Tax http://t.co/7P8g4nBL arguments against "disproportionate, inconsistent, disingenuous" #taxthebankers

  6. nigel thompson

    Report rebuts “disproportionate, inconsistent and disingenuous” attacks on Financial Transaction Tax: http://t.co/nYRDFxDi by @RobinHood

  7. UpToHereWithTheBS

    Report by JP Morgan banker rebuts “disproportionate, inconsistent and disingenuous” attacks on Robin Hood Tax: http://t.co/SgSTk7pS

  8. Oxfam South West

    New report rebuts “disproportionate, inconsistent & disingenuous” attacks on FTT/ #rht http://t.co/QGCc23I9 see report: http://t.co/i7CyTEYh

  9. Jayne Hornby

    RT @leftfootfwd: Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT http://t.co/3Vcf3V47

  10. Kasch Wilder

    RT @leftfootfwd: Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT http://t.co/neylfLTJ (Robin Hood Tax)

  11. Oxfam South West

    Will a Robin Hood Tax lead to financial Armageddon? One banker doesn't think so: http://t.co/mZN5IN1P #FTT #RHT

  12. Oxfam Midlands

    Will a Robin Hood Tax lead to financial Armageddon? One banker doesn't think so: http://t.co/BvK8Jbpg #FTT #RHT

  13. As Europe looks set to back a Robin Hood Tax, Osborne remains on the side of the 1% | Left Foot Forward

    […] See also: • Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT 13 Mar […]

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