Osborne’s thrown a javelin through his own foot by failing to make FTT a reality

France has implemented a tax on the financial sector that will raise money to help the poor, writes Simon Chouffot of the the Robin Hood Tax campaign.

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By Simon Chouffot of the the Robin Hood Tax campaign

Hold your breath because yesterday France did what many, including the UK government, like to pretend is impossible to do – they implemented a tax on the financial sector that will raise money to help the poor.

Robin-Hood-TaxA 0.2% tax on share transactions will raise the French government about 500 million euros a year, a proportion of which President Hollande has stated will be used to tackle global poverty and the HIV-AIDS epidemic.

Fortunately it will not, as some have predicted, cause the sky to come crashing down.

It is a small but significant victory for those of us calling for a Robin Hood Tax. France should be congratulated for not only ensuring those with the broadest shoulders bear their fair share of the burden, but for earmarking some money for global priorities that have been knocked so badly off course in the wake of the financial crisis.

Importantly, it’s a precursor for a more wide-ranging FTT covering bonds and derivatives as well as shares that left- and right-of-centre governments, representing 67% of GDP, plan on implementing before 2012 is out.

France, Germany, Spain and Italy are all uniting behind the proposal, the only notable exception is the UK government who’ve compiled a dodgy dossier of bad economics and half-truths to justify their opposition to the tax.

Take for example the infamous ‘Swedish example’ that is often raised by the government and others – credit to the bank lobbyists who have been doing their work here. Sweden implemented an FTT in the 1990s and it was an unmitigated disaster; however, much like holding up a picture of a bike with square wheels, it doesn’t prove the concept of bikes is flawed.

 


See also:

The financial transactions tax has the potential to raise £20 billion a year for the UK 14 Jun 2012

As Europe looks set to back a Robin Hood Tax, Osborne remains on the side of the 1% 16 May 2012

Report rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT 13 Mar 2012

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

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


 

The bittersweet irony is that in the design of the tax at least, France is actually following in the UK’s footsteps. Our 0.5% tax on shares transactions – known as stamp duty and which has existed in one form or another since 1694 – raises the Exchequer a tidy £3 billion a year. There are plenty of other successful FTTs – more than 40 in fact – that exist around the world.

Britain’s grandstanding against plans for a broader European FTT is also largely futile – an FTT implemented by France, Germany and others would still apply to European trades taking place in London, and so we will achieve little more than turning down billions in additional revenue.

These billions could be used to protect the jobs of teachers and nurses, invest in infrastructure to get the economy moving or help meet our commitments to help poor countries cope with climate change.

I’m trying hard to avoid any Olympic analogies here – but left in the blocks, limping along at the back, losing on purpose or throwing a javelin through your own foot would all do for describing the government’s approach to getting the financial sector to pay its fair share.

A recalcitrant Conservative Party can be explained by self-interest – more than half their funding comes from the financial sector. But with momentum now turning a Robin Hood Tax into reality, there is surely an opportunity for the opposition to support an idea that could finally see the financial sector working in the interests of society. For too long it’s been the other way around.

 


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36 Responses to “Osborne’s thrown a javelin through his own foot by failing to make FTT a reality”

  1. Robin Hood

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  2. Becca Miller

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  3. Liza Harding

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  4. rodmckie

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  5. Simon Chouffot

    Osborne's thrown a javelin through his own foot by failing to make FTT a reality: http://t.co/uLd9yIfx by @robinhood’s @schouffot

  6. Marcus A. Roberts

    Osborne's thrown a javelin through his own foot by failing to make FTT a reality: http://t.co/uLd9yIfx by @robinhood’s @schouffot

  7. Nature Clip

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  8. HealthPovertyAction

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  9. Martin McGrath

    France introduces modest "Robin Hood Tax", world doesn't end http://t.co/Gc8D1eeK UK still opposes EU extension of a tax we already have

  10. turnulhg2

    Osborne's thrown a javelin through his own foot by failing to make FTT a reality: http://t.co/z78WMcXq by @robinhood’s @schouffot

  11. Amy Whalley

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  12. Pulp Ark

    Osborne’s thrown a javelin through his own foot… http://t.co/aMybfzO9 #SustainableEconomy #fairness #financialsector #muslim #tcot #sioa

  13. Martin Drewry

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  14. Jon Slater

    Why Osborne's opposition to @robinhood tax is "like throwing a javelin through his own foot" http://t.co/hWMikiOm – nice blog by @schouffot

  15. Lord Blagger

    Great idea. Lets cut stamp duty to 0.2%. That’s a tax.

    We can also put taxes on other financial transactions. How about a nice clear transaction tax?

    The ATM tax. Everytime you take money out of an ATM, the government gets a quid.

  16. Evan Price

    “Take for example the infamous ‘Swedish example’ that is often raised by the government and others – credit to the bank lobbyists who have been doing their work here. Sweden implemented an FTT in the 1990s and it was an unmitigated disaster; however, much like holding up a picture of a bike with square wheels, it doesn’t prove the concept of bikes is flawed.”

    Explain this please … how is the ‘Swedish example’ mistaken? The truth is that if this were such a simple solution, then Governments around the world would have introduced it already. The reason that most Governments have been reluctant to introduce a tax equivalent to Stamp Duty/Stamp Duty Reserve Tax is because the effect on British GDP is estimated to be negative. We shall have to see what the impact is …

    The truth is that a tax will only raise money if the transactions exist to tax – if you set a tax at a rate that is a multiple of the margins on the trade (and yes, 0.05% is a multiple of the few pips that is the margin on many of financial transactions that the campaign proposes to tax), then the tax will raise precisely nothing. So much for the ‘billions’ that are claimed to be raised.

    Yes, a restricted stamp duty reserve tax or equivalent can raise quite substantial sums when fixed at 0.5% or less. But even raising £4 to 6 billion per annum, it is within the margin of error of Government expenditure. It is intersting to note that the French equivalent will, according to French Government estimates, raise about a fifth of what is raised here.

    Finally, the assumption behind the proposal for Tobin type taxes is that it will provide ‘grit in the wheels’ and so reduce volatility. Please will someone provide some evidence, as opposed to polemic, that supports this assumption. I have been asking this question in almost every post I have put up in response to these proposals and no-one has yet responded at all. We have had a transaction tax on most land transfers over the last decade or so – is there any evidence that this has had any ameliorating effect on the asset price bubble that we have seen in property prices in the UK over that period?

  17. Anonymous

    Hey, let’s suck it and see! It can’t be any worse than current practice and abuse, can it?

    RE Sweden: you see, we have learned the lessons and, in benefiting from experience and hindsight, wouldn’t need to repeat past failures.

  18. Coalition PLUS

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  19. Coalition PLUS

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  20. Michelle Clarke

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  21. Michelle Clarke

    UK is left in the blocks as Osborne fails to make a financial transaction tax a reality >> http://t.co/xGkJvUt6 via @leftfootfwd #FTT

  22. BevR

    RT @leftfootfwd: Osborne's thrown a javelin through his own foot by failing to make FTT a reality http://t.co/XvdIDfKO

  23. Terri Holkham

    RT @leftfootfwd: Osborne's thrown a javelin through his own foot by failing to make FTT a reality http://t.co/XvdIDfKO

  24. OccupyUSA

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  25. Hard Truth Finding

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  26. I3r0k3n W1ng5

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  27. John M. Braga

    MT @schouffot: France implements @robinhood tax, UK floundering at the back. @leftfootfwd (olympic analogies incl.) http://t.co/DknMU9Ij

  28. Anonymous

    Sure, and let’s tax you properly, backdated. You owe everything, pay up!

  29. Anonymous

    Ah, so you’ll have no problem coughing up 4-6 billion to protect welfare spending then if that’s the case.

    And if you can’t be bothered to read the proposals and their references… (And no, frequently traded shares are not the same thing as infrequently traded houses)

  30. Evan Price

    I have read some of the proposals and some of the references – from what I have written you will realise that they do not answer my queries at all – which is why I am asking questions. If I have missed something that provides the answers, then would it not be better to point me to them?

    If the problem is ‘high frequency trading’ (an assumption and assertion that I happen to disagree with), then the solution is to reintroduce settlement times … not taxation.

    Personally, I think that the problem was a failure of risk assessment (which was a problem of the market participants and a problem of both regulators and policy makers) – but that is an argument for another time.

  31. Evan Price

    ‘Suck it and see’ was a term that I used when teaching sport diving in the Army for soldiers to come and have a go in a swimming pool or other safe environment. When the risks are minimal, you can ‘suck it and see’ … but not otherwise.

    What lessons have been learned from Sweden?

  32. Anonymous

    HFT *is* a risk issue.

  33. Evan Price

    So why is taxation to eliminate the activity the solution when the costs will be substantial to other trading activities that are not a ‘risk’? Is not the simpler solution to regulate the ‘risk’ out by other means?

  34. Anonymous

    Except the costs won’t be “substantial” for infrequently traded shares, and it’s not the only behavioural issue it addresses.

  35. Evan Price

    Except they will – the cost to the economy as a whole in terms of reduced GDP and reduced growth that arises from such a tax – it was estimated by experts that the cost of a proposed EU wide FTT would be about 1% of GDP across the EU (that is the middle of the range that you can find quoted out there by economists) – and if you think that a further 1% reduction in GDP is not ‘substnantial’, then our definitions are not in sync.

    As to behavioural issues, what other such issues are you proposing to ban?

  36. Anonymous

    Ah yes, the concept that allowing bubbles to be blown is a good idea, and that the kind of “growth” (in bankers wallets) you get from HFT is worth anything to the 99%.

    And do try reading my post again. I said that the tax would have multiple effects.

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