More than 50 charities, unions, faith groups and celebrities have joined forces to call for an international transaction tax on investment banks. They argue that this ‘Robin Hood’ tax (or ‘Tobin tax’, as you may have heard it called) could raise as much as £250bn a year to bolster public services and fight climate change and poverty. Excellent causes all – and there are no shortage of heavyweight politicians and economists who favour this approach to banking reform. But even if we put aside our natural distaste for economic policies endorsed by celebs, the fact remains that this would be devilishly hard to implement in practice…
The UK campaign, which has been endorsed by the likes of Oxfam, Bernardo’s, the TUC and the Salvation Army, is being launched today with help from comedy writer and director Richard Curtis (an influential voice in the anti-poverty movement). He’s made an online film, backed by Bono’s One campaign, in which his old chum Bill Nighy plays a banker getting increasingly jittery as he’s quizzed about the benefits of such a tax. There’s also a jazzy advertising campaign and general media onslaught; they even projected the question: ‘Do you want to be part of the biggest bank job in the world?’ onto the side of the Bank of England this morning.
Their plan is that this tax will only apply to transactions between investment banks, and will start at something like 0.05%, i.e. about 5p for every £1,000 traded. ‘The fact is that a tiny tax on the transactions – shares, bonds, foreign currency and derivatives – of the financial institutions that caused the recession could make a massive difference to people at home and abroad who have to live with its consequences,’ Nighy writes today in the Telegraph.
It may rather stick in the craw that the cast and crew of Love Actually are getting more coverage for their take on this issue than the likes of Nobel economics laureate Joseph Stiglitz, who’s been arguing something similar for a while – possibly a rather depressing comment on the power of celebrity endorsement. After all, we don’t expect the Treasury to write whimsical romantic comedies, so why should Richard Curtis be setting economic policy?
But perhaps the more salient point is whether a tax like this would actually work. For a start, unless it’s introduced globally, it will just penalise participating jurisdictions – and despite the likes of Gordon Brown and Nicolas Sarkozy backing the idea, the US (along with the IMF) seems completely uninterested in the idea. And even if you could get everyone to agree, implementing such a complex tax (and distributing the proceeds afterwards) would be a logistical nightmare. The cause is legitimate, and the potential outcome admirable – but making it work in practice is another matter.
In today's bulletin:
No vote for fast-buck merchants, says ex-Cadbury chairman
'Robin Hood' banking tax garners celebrity support
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