The Times on Friday branded as “unworkable” the Tobin tax being considered by the Treasury. But development expert Rodney Schmidt has demonstrated its practicality
The Times leader on Friday branded as “unworkable” the tax on currency transactions which the Treasury now considers as a potential measure to “reduce the burden on society of financial sector failures”.
But, on the contrary, the development expert Rodney Schmidt has demonstrated the practicality for countries to take unilateral action which imposes a levy on their own currency’s transactions.
According to Schmidt, principal researcher for the Canadian development non-governmental organisation, the North-South Institute, a tiny levy of 0.005% would be applied to every transaction of a given currency.
A deacade ago, when War on Want launched its campaign for such a tax – named after US economist James Tobin – the world was emerging from a financial crisis not unlike today’s.
Millions of workers in Indonesia, Thailand, the Philippines and South Korea lost their jobs and their livelihoods when the speculative bubble of “hot money” burst around them. Twenty million people fell below the poverty line in Indonesia alone.
There is now considerable political momentum in Europe and the wider world behind a tax that would cover the full range of financial transactions, not just currency speculation. Several such taxes already exist, of course, including the 0.5% stamp duty already payable on all UK share dealings.
Even at a lower rate of just 0.05%, an Austrian think tank have indicated that a standard tax across stocks and shares, currencies, derivatives and other financial transactions could generate a massive $700bn (£420bn) a year. The trillion dollar bank bailouts have plunged our national economies into long-term debt, threatening public services cuts and thousands of jobs.
The billions that could be raised by a financial transactions tax offer a chance to recoup those losses and to direct funding towards frontline public services, anti-poverty programmes or adaptation to climate change. The forces of reaction may be massing in opposition, but this is a battle we cannot afford to lose.
Our guest writer is John Hilary, Executive Director of War on Want
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10 Responses to “A “Tobin” tax is workable”
Ben Furber
RT @leftfootfwd: A “Tobin” tax is workable: http://is.gd/5mGwt
neilrfoster
RT @CoopParty: RT @leftfootfwd: A “Tobin” tax is workable: http://is.gd/5mGwt
Daniel
A Tobin tax is totally unworkable. How do you control a Sterling transaction done in Tokyo, for example. We can’t invade other countries tax jurisdictions. All that would happen is that most financial dealing would go offshore, to somewhere with no Tobin tax.
That is a moot point though. Sure you could possibly raise $700bn a year taxing every financial transaction in sight, but where is that money going to come from? The biggest banks in the world, grouped together, aren’t worth that much.
All that would happen, is that any costs associated with such a Tax would simply be passed down to the end user; in this case other businesses and individuals. Higher taxes slow down growth. I would have thought the best anti-poverty measure would be allow businesses to grow and thus employ people.
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John Rendel
If we can coordinate an international response to climate change (let’s hope we can) we can coordinate a multi-lateral Tobin tax. Practically, linking the latter to the former makes a lot of sense as it will set up the apparatus to maintain such a tax after managing the transition to a low-carbon world economy. We should back Ethiopia’s recent plan on this even if that is the only positive thing to come out of Ethiopia since the Queen of Sheba.