William Hague criticised Labour's support of a 'Tobin Tax’ at PMQs last week. In doing so, he misrepresented economic opinion and the views of other countries.
While deputising for David Cameron during PMQ’s last week, William Hague adopted the role of chief Tory inquisitor and criticised Labour for pushing the idea of a global financial transaction tax, also known as a ‘Tobin Tax’. In doing so, he misrepresented economic opinion and the views of other countries.
Hague claimed “the Prime Minister’s Tobin tax on transactions”:
“has been rejected throughout the world and was ridiculed yesterday by the Governor of the Bank of England?…
“The Governor of the Bank of England said that President Obama’s proposal is much more serious than the Prime Minister’s Tobin tax. In fact, the Governor said that he could not think of anyone internationally who was enthusiastic about the Prime Minister’s idea.”
This was a remarkable statement to make as both France and Germany, along with the President of the European Commission have expressed strong backing for the Tobin Tax. In December, the 27 heads of the EU in their joint communique, expressed early support for the tax and called on the IMF to assess and study the proposal:
“The European Council encourages the IMF to consider the full range of options including insurance fees, resolution funds, contingent capital arrangements and a global financial transaction levy in its review.”
Mr Hague further claimed that “President Obama’s proposal is much more serious than the Prime Minister’s Tobin tax”. This despite 200 leading economists in the US signing an open letter in December 2009, arguing that financial speculation in the computerised world has led “to an enormous explosion in trading volume, with most trades having little economic or social value and redistributing disproportionate resources to the financial sector.” They call for the introduction of “modest” global financial transaction taxes.
Closer to home, the head of the UK Financial Services Authority has expressed support for the proposed idea, decrying some trading activities in the financial world as “socially useless”, that needed to be curbed with global transaction levies. Though not universal, there is a welter of support internationally for the Tobin Tax. The Conservatives should take stock when next crafting their economic rebukes against the Government.
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