By Emma Haslett Tuesday, 25 October 2011

Pope wants a Robin Hood tax - has it got a prayer?

The Pope has given his blessing to a levy on all financial transactions. Easy in theory, not so much in practice.

It’s hard to argue when God’s on your opponent’s side – at least, we assume that’s what the Pope’s reckoning on. His Holiness has come out in favour of a ‘Robin Hood’ tax: the nickname given to an idea by Nobel laureate James Tobin in 1977, who called for a tiny levy on every financial transaction. The idea is that it would raise vast sums without anyone really noticing, and it’s back in favour as a potential solution to the debt crisis. But as numerous factions of the City have pointed out that, intervention from Our Lord notwithstanding, it would be a tough one to impose…

The pontiff is the latest in a long line of slebs who’ve backed the idea of a Robin Hood Tax – Bill Gates has also signed up to a campaign in favour of it, as have Warren Buffet, FSA chairman Lord Turner, and the heads of state of both France and Germany (currently dubbed ‘Merkozy’. We like). The Pope, though, has gone one step further, calling for ‘virtuous banks’ (whatever than means) to be given state subsidies.

The only one still coming out against the idea is the City, which, God or no God, is vigorously against the idea, on the basis that it would be hit disproportionately. Which may not be a particularly virtuous argument, but does make sense: if a Tobin tax were only imposed across Europe, it could easily cause a mass exodus of disgruntled financial institutions (which have, after all, been threatening to leave for the past few years). So it would only really work if it were imposed universally – ie. everywhere in the world. And, presented with the opportunity to play host to some of the world’s largest financial institutions, thus becoming global financial centres, we’re not sure developing economies like China or India would be willing to play ball…

Still: David Hillman, of the Robin Hood Tax Campaign, did have quite a good point when he said: ‘On one side we have Bill Gates, a thousand economists, France, Germany and now the Vatican. On the other, we have City fat cats and David Cameron’s government.’ Where’s Friar Tuck when you need him?

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