I personally think this is an excellent idea, I ecourage others who think so to head on over to http://http://robinhoodtax.org.uk/
How I Works
• The Robin Hood Tax is a tiny tax on bankers that would raise billions to tackle poverty and climate change, at home and By taking an average of 0.05% from speculative banking transactions, hundreds of billions of pounds would be raised every year.
• That’s easily enough to stop cuts in crucial public services in the UK, and to help fight global poverty and climate change.
Why now?
• Because of the financial crisis, frontline services at home – like the NHS and our schools – are under fire.
• At the same time, poor communities and the environment are being hit hard – as aid and green budgets are slashed by rich countries.
• So it’s time for the people who caused this mess to pay to clean it up.
Who’s in?
• Gordon Brown, Angela Merkel (the German Chancellor) and Nicolas Sarkozy (the French President) have all spoken out in support of a tax on financial transactions.
• Plenty of business bigwigs are on-board too. Like Lord Turner (from the Financial Services Authority), George Soros (the philanthropist) and Warren Buffet (US businessman extraordinaire). And then there are the hundreds of economists who have backed the idea, too.
• This isn’t some crazy pipedream. It’s a simple and brilliant idea which transcends party politics and which – with your support – can become a reality.
The Big Idea
We are calling for governments around the world to implement a tax on financial transactions – called the Robin Hood Tax.
Implemented globally, it would tax the trade of certain financial assets. Things like stocks, bonds and foreign exchange, traded both physically and as derivatives (options, forwards, futures and swaps), and bought and sold on Exchanges and Over the Counter (OTC). While OTC trades are technically more difficult to capture, the long-term goal is for all financial transactions to be taxed.
How much would it raise?
Up to $400 billion globally every year. The rate of tax would vary from 0.5% on stocks to 0.005% on currency transactions.
(source: Bank of International Settlements, International Finance Services London)
Various experts (Schulmeister (2009) who provides a good summary of the work of others, Baker et al (2009), and our own campaign research) have produced estimates of the tax receipts, using various methodologies. All estimates are in the hundreds of billions of dollars.
How does it work?
Ten years ago it was felt that a financial transaction tax was too complex to collect.
But a lot has changed in the last decade, as banks have improved their IT infrastructures (such as the Real Time Gross Settlement – RTGS) to help drive down trading costs. The 0.5% Stamp Duty paid on shares on the London Stock Exchange is one of many taxes on financial transactions now in place.
So the Robin Hood Tax would be applied wherever a transaction takes place. Currently, the vast majority of financial transactions take place on regulated exchanges in financial centres like New York, London and Tokyo.
And though the details of how to tax Over The Counter transactions have yet to be finalised – as these currently occur between financial institutions, without the official exchange being involved – the bank licence system could be changed to ensure that these trades do take place within financial exchanges.
Will the tax be passed on to consumers?
The Robin Hood Tax will not impact on personal banking or on retail banking. That’s because it targets a distinct area of bank operations – high-frequency large-volume trading, undertaken by financial institutions in the ‘casino economy’. If you change money to go on holiday, send remittances abroad, invest in a pension fund or take out a mortgage, you will not be affected by this tiny tax.
Can the financial sector afford to pay it?
Although 0.05% is a tiny tax, $400 billion is a substantial amount. We recognise that even such a small tax will have an effect on the market. Economists such as Schmidt have estimated that at a rate of 0.005% currency markets may shrink by 14%. This is due in part to the fact that the margins on some speculative trades are extremely low and these may not continue.
Banking is the most profitable industry in the world, with profits of $788 billion in 2006, which have rapidly returned since the financial crisis, and are predicted by some to double by 2016. Banking is 26 times more profitable per employee than the average of all other industries. (Source: McKinsey, What’s in store for global banking?)