Want to really help the ‘Jams’? Time for a Robin Hood Tax

It's working in Germany and France - why not here?

 

The Chancellor’s Autumn Statement will broadcast loud and clear that the financial crisis and its legacy of austerity are still hurting millions up and down the country.

Figures released last month show that more than half a million food parcels have been handed out in the UK in the last six months alone, many of them going to children. So will Philip Hammond look to balance his books on the working poor rather than the financial sector that caused these times of hardship?

The Chancellor should look at increasing the burden on a banking sector that can clearly afford to pay more – a sector who have no trouble lavishing telephone number-sized salaries on their executives while paying out billions in fines for copious crimes and misdemeanours.

He should do this rather than target the group recently termed the ‘Jams’ (Just About Managing), who look set to lose out by a massive £725 a year per household.

This is because the planned benefit freeze will hit the low-waged the hardest, particularly those receiving in-work benefits like tax credits, child benefit and housing benefit. Surely there’s a better way?

We may be heading out of the EU, but perhaps there are some interesting lessons to learn from our continental cousins.

On the European mainland, countries like Germany, France, Italy and Spain have responded to the financial crisis by regulating and taxing their banking more robustly to pay for the cost of the bailouts and the recession caused by the sector’s reckless behaviour.

From Germany’s Chancellor Merkel on the right to France’s President Hollande on the left, their favoured tool for the job is the Financial Transactions Tax (FTT), popularly known as the Robin Hood Tax.

This is a small levy on the enormous volume of transactions carried out everyday by finance firms, not ordinary people, agreed in principle last month and set to generate about 22 billion euros a year in extra revenue to pay for infrastructure, job training and public services. A sensible response, you might agree.

Apart from the substantial tax receipts, the FTT has two significant benefits – creating a more stable economic system by reducing the worst kind of casino trading and giving tax authorities far better oversight of financial activities, making it an important weapon in the war against tax dodging.

What sort of difference would the FTT make to the ten million ‘Just About Managing’ households in the UK?

Well, two months of FTT revenue could reverse the cuts to the Employment and Support Allowance (ESA) and to Universal Credit outlined in the Autumn Statement. The statistics are compelling:

  • A month and a half of the FTT could plug this year’s deficit for NHS England
  • Just one week’s worth of revenue could pay for 5,000 new police constables, 5,000 newly qualified nurses and 5,000 new teachers
  • Just five days worth could pay for 2,500 new homes
  • Just one day could pay for 5 million hours of home care to help some of the most vulnerable in our society

The Robin Hood Tax is the proof of the pudding for Theresa May’s government. Will the first act of her Chancellor be to deal a blow to the very group she identified as most in need of support?

If the government is to avoid a gaping chasm between words and actions in Brexit Britain, with credibility and authenticity the principal victims, then bold steps are required to show the country that resolve trumps rhetoric.

The introduction of an FTT at home comes down purely to politics. In Europe the FTT train has left the station with ten countries on board.

We could go on the same journey even if we do not take the same track and the revenue could prevent the ‘Jams’ being on the frontline of even further austerity.

David Hillman is Director of the Robin Hood Tax campaign

See: Five ways the Autumn Statement could cut inequality and help ‘the Jams’

See: Theresa May is no safe pair of hands – her corporation tax cuts couldn’t be more reckless

7 Responses to “Want to really help the ‘Jams’? Time for a Robin Hood Tax”

  1. Craig Mackay

    It really is important for people to get these sums of money that Philip Hammond and the Conservative government are talking about, and get them in proportion. £1.3 billion sounds a lot of money for infrastructure but that is less than is being budgeted for the upgrade of a short section of dual carriageway for an extra lane on the A14 between Cambridge and Huntingdon. £1 billion is only £15 per head for everyone in the UK, and when that is spread over several years it really isn’t very significant. Daily trading on the London stock exchange is currently averaging about £5 trillion, or about £75,000 per head of UK population PER DAY! Most of that will be done at a profit, virtually none of which leads to any payments to the Exchequer. The fundamental inequalities in our economy have to be addressed and inequities such as this are central to why whole generations in the UK see their prospects slowly diminishing with time. If you are on an escalator with people at the top, middle and bottom but when everybody feels the escalator going up then most people are fairly happy. At present the vast majority can feel the escalator going down and after this Autumn Statement it will start moving down yet faster for people at the bottom and in the middle.

  2. Autumn Statement: Liveblog | Left Foot Forward

    […] Want to really help the ‘Jams’? Time for a Robin Hood Tax – David Hillman, Director of the Robin Hood Tax campaign […]

  3. Michael WALKER

    FTT taxes actually drive business elsewhere..

  4. David Hillman

    The UK currently has an FTT: the stamp duty on shares that raises £3bn a year. If the contention about driving business elsewhere was true then people would not buy shares in the UK but purchase in countries that do not levy such a tax. But that’s not what actually happens – the London Stock Exchange is one of the most successful stock exchanges in the world. People buy the shares and pay the tax because they want to invest in UK companies and the small tax they pay is negligible against the gains they hope to accrue over time. So the argument about FTTs driving business elsewhere is simply not supported by the evidence. It doesn’t stack up!

  5. Ron Abbott

    What would this tax? We already raise £3bn a year from stamp duty charged at a higher rate (0.5%) than any FTT on the continent.

  6. David Hillman

    In fact, according to the latest Treasury figures we raised £3.3bn from the stamp duty on shares in the last financial year. The 10 European countries implementing Financial Transactions Taxes (FTTs), including France, Germany, Italy and Spain, are introducing taxes on share transactions but also on most derivatives. Between them, it is estimated these new FTTS will raise in the region of 22 billion euros a year. In the UK, we could bring in considerably more than the £3.3bn we do at present by 1) strengthening our current FTT and 2) expanding it to more assets.

    RE 1, strengthening our current FTT – closing the major loophole around what is known as the ‘market-maker exemption’ would increase receipt from the stamp duty on shares by a further £1.2 – £1.9 billion a year, according to City think tank Intelligence.

    RE 2, taxing more assets – expanding the FTT on shares to bonds, derivatives and potentially foreign exchange would raise many billions in additional revenue – the exact volume of tax receipt dependent on the rates of tax employed.

  7. Misha Carder

    If Germany can do the Robin Hood Tax – why can’t we? It’s so blindingly obvious that it would be good to hear from Philip Hammond why we aren’t doing it. It’s kid’s stuff (rockets made of loo rolls innards) that no spare household income, means no multiplier effect: money spent in local businesses going into local economies. Do the sums Chancellor – Please.

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