Time for Action on Robin Hood Tax

This is a big week for a small tax. The Robin Hood Tax Global Week of Action is in full swing and with major developments in the USA and Europe this truly tiny tax is increasingly becoming more likely.

The Global Week of Action is a prime opportunity to focus the world’s attention on what this tax could do, and that it could generate billions of pounds – hopefully even hundreds of billions of pounds. This could be upwards of £20 billion annually in the UK; if implemented in the USA and across Europe the tax could raise over £176 billion pounds a year; if agreed globally as much as £250 billion a year could go to vital needs like tackling poverty and climate change.

People across the world will be making sure that this is one item that will stay top of the agenda. From the US National Nurses Union demonstrating in Chicago to German campaigners staging a mock marriage between Chancellor Merkel and President Hollande ahead of their meeting on Tuesday to emphasise the fact that the FTT is one measure they can agree on, there is a worldwide momentum inching ever closer to making the Robin Hood Tax a reality.
Pressure is also coming from new quarters, including a group of United Nations independent experts who have urged the EU to take the lead in promoting the adoption of a global financial transaction tax to offset the costs of the enduring economic, financial, fuel, climate and food crises, and to protect basic human rights.

A report from these expert says: “Where the world financial crisis has brought about the loss of millions of jobs, socialized private debt burdens and now risks causing significant human rights regressions through wide-ranging austerity packages, a financial transaction tax (FTT) is a pragmatic tool for providing the means for governments to protect and fulfil the human rights of their people,” said the rights experts on extreme poverty, food, business, foreign debt and international solidarity.

Here in Wales, we have already seen great support from our Assembly Members with over a third signing up in support – from three parties – and First Minister Carwyn Jones showing leadership by being the first Government leader in the UK to publicly back the Robin Hood Tax. This has now been followed by support from Scotland’s Alex Salmond.

There are very good reasons – social, economic and moral – why support is coming from so many quarters.

The money raised through the tax could fight poverty at home and overseas – crucial when we see rising numbers of people here in Wales struggling to make ends meet, and those in the world’s poorest countries already bearing the brunt of the financial crisis of the past years.

It could also tackle climate change which we know is already affecting the poorest people across the world either threatening their livelihoods and, in more severe instances sometimes, their lives. Some of the funds raised through the Robin Hood Tax could provide the much needed money to pay for low-carbon and adaptation measures when global agreements on how to pay for these have made far too little progress.

Predictably, the financial services naysayers are out in force forecasting doom if this tiny tax was ever implemented.

But it’s important that we set the record straight. The Robin Hood Tax would not affect retail banking and impact on individuals’ savings and mortgages. Instead it would target the casino style banking that caused the financial crisis in the first place – the often speculative trading on shares, bonds, foreign exchange and derivatives.

The financial sector continues to receive preferential treatment. For example, while the rest of us pay 20% VAT on goods and services – the financial sector remains exempt. The UK government admits that the VAT exemption costs the rest of us £5.5 billion a year.

It could not be argued better than as Magdalena Sepúlveda, the UN Special Rapporteur on extreme poverty and human rights has put it, “When the financial sector fails to pay its share, the rest of society must pick up the bill,” she says. “It is high-time that governments re-examine the basic redistributive role of taxation to ensure that wealthier individuals and the financial sector contribute their fair share of the tax burden.”

What is remarkable is how a growing number of figures in the business worldare now vocal in their recommendation for the tax to be implemented. Leading business figures across the world such as Bill Gates, Warren Buffet and George Soros have backed the proposal. Over a thousand of the world’s leading economists have also backed the tax and the IMF and the European Commission have both said that it’s feasible.  200 organisations across the EU have written ahead of EU Growth Summit.

Following a new study from leading economists –Stephanie Griffiths and Avinash Persaud – which shows that taking the positive and negative impacts of the tax together estimates that the net effect would be to add at least 0.25% to GDP not reduce it.

Opponents are simply scaremongering in order to protect special interests. Persaud, who is the founder and Chairman  of Intelligence Capital, has made this clear recently, saying that the tactics employed by London bankers today with regards to the proposal for a financial transaction tax are the same as those used by the tobacco industry many years ago. He calls it a ‘deliberate obfuscation’.

This misleading narrative is what we must expose and counter by galvanising the public to demand that this a small piece of justice must be delivered to the benefit of the people here and abroad.

Schopenhauer’s famous are a perfect summary of what is now happening in this campaign and give hope that the journey of the financial transaction tax is most certainly heading towards reality – “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

World leaders of have the biggest opportunity in decades to get this night. Change can lead the way. The time for action is now.

Join the Global Week of Action and sign Oxfam Cymru’s online petition showing that Wales backs the Robin Hood Tax.

Stephen Doughty is Head of Oxfam Cymru