Only the City-backed Tories oppose the Robinhood Tax


12:42 pm - March 27th 2013

by Owen Tudor    


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Yesterday, senior Liberal Democrat Minister Vince Cable went beyond Government policy in backing the Robin Hood Tax to crack down on short-termism. He told a select committee:

“I have got no objection to the… well, I would put it more positively – I think there is a case if you are trying to change behaviour from using a market instrument of that kind to make it happen.

“I think there is a case and I’m in some ways quite disposed to it.”

The immediate slap down from anonymous Treasury sources – they said he wasn’t responsible for tax policy – shows how important Vince’s statement is.

As Business Secretary, Cable is ideally placed to see the damage done to the real economy by the high frequency trading and speculation that dominates the finance sector.

TUC General Secretary Frances O’Grady said:

“Most European governments – apart from our own – can see the value in a Robin Hood tax on the banks’ financial transactions and a cap on the sky-high bonuses they’ve been awarding their senior staff.

“We welcome the Business Secretary’s acknowledgement that there is a case for a financial transactions tax and hope that some of his more sceptical colleagues may soon realise its worth too.

“The banks helped make the mess we’re in, yet it’s ordinary families who are paying the price. A tax on the banks would raise much-needed revenue for the Exchequer and hopefully persuade ministers that the time has come to put austerity economics back in its box.”

Vince was also backed by Simon Chouffot, spokesman for the Robin Hood Tax campaign, which represents organisations including Barnardo’s, Oxfam and Friends of the Earth as well as the TUC, who said:

“It’s good news that Vince Cable has broken ranks with his Cabinet colleagues over the Robin Hood Tax.

“As Business Secretary, he should know better than most that defending the City fat cats is bad for Britain and bad for business. The banks are protecting the status quo of gambling and bonuses at the expense of investment in jobs and growth.

“The Government should drop its ideological opposition to a tax most voters back, and make sure Britain gets its fair share of the European FTT to help protect public services and rebuild our economy.”

A statement like this from a senior Liberal Democrat politician – in line with Labour Leader Ed Miliband’s call for responsible capitalism – adds to the tension in the coalition.

In most European countries, the Robin Hood Tax is supported across the left and the centre-right, and that could spread to Britain, leaving the City-backing Conservatives isolated again.

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About the author
Owen Tudor is an occasional contributor to LC. He is head of the TUC’s European Union and International Relations Department and blogs more regularly at the Touchstone blog.
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Reader comments


More tax. Free money. Genius.

Even the EU says that it will cost more than it gains. “… A long-run (20 year) reduction in gross domestic product in the EU by 0.53% if “mitigating effects” take hold, or up to 1.76% if they don’t”.

Just what we need.

1.76% growth would be wonderful right now. You happy to earn 1.76% less? I’m not.

“As Business Secretary, Cable is ideally placed to see the damage done to the real economy by the high frequency trading and speculation that dominates the finance sector.”

You could make a perfectly valid case that the short termism that plagues the UK damages the real economy. I would argue that most of the damaging short termism comes from government but that is beside the point. However, to jump onto high frequency trading as damaging the real economy is just making stuff up. It makes no real difference to a company how quickly or often their shares are churned in the secondary market. Moreover, you are inferring from Cable that taxing a financial instrument will prevent that instrument harming the real economy i.e. the tax will stop it doing what it was previously doing. Yet your colleague Frances O’Grady says it will raise “much-needed revenue”. Well if the tax achieved the Cable aim it would not raise the much-needed revenue that Frances O’Grady wants.

“Vince was also backed by Simon Chouffot, spokesman for the Robin Hood Tax campaign”

That is like saying the Pope backs Catholicism. Of course the spokesman for the Robin Hood Tax will back a Robin Hood Tax.

3. Gallbladder

I’d remind that it was the Sheriff of Nottingham who collected taxes, not Robin Hood.

2 – this isn’t being driven by logic and evidence based-policy though, it’s driven by a dislike of the City and finance.

Britain has a long history of charging “Stamp Duty” on financial transactions:

“The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is generally payable at 0.5 per cent.”
http://www.sayersb.co.uk/tax%20rates/stamp.html

Stamp Duty is also payable on Land and Property Transactions.

The are substantive reasons for being cautious about introducing an additional “Financial Transactions Tax”, whatever Vince Cable says:

– Financial transactions subject to an additional tax are likely to migrate out of London to other financial centres, such as New York, Chicago, or to Zurich in Switzerland, where there is no liability, resulting in loss of income accruing to London financial markets.

– It would be likely that the UK would have to contribute at least some part of the proceeds to the EU. As London is the largest financial centre in Europe by far, the effect would be to make the UK contribute an even larger EU subscription – which explains why some EU members are so keen about introducing such a tax, especially with the current problems afflicting the Eurozone.

leaving the City-backing Conservatives isolated again.

Hmm. I’m not a Tory, I’m not City backed (I have indeed raised money in the City for my mining company but that’s not quite what you mean, is it?) and I’m against the RHT. As I have been vocally since you all started blathering about it.

Indeed, it’s been some years now since you said you would go away and find out about Tax Incidence Owen. Have you not found the time yet?

For years up to an announcement by Gordon Brown in June 2003, it was the official departmental policy of the Department of Trade and Industry (DTI), the predecessor of the department for Business, Innovation and Skills (BIS), for Britain to sign up to join the Euro asap, which is a persuasive reason for not taking the advice of BIS about a Financial Transactions Tax very seriously.

It was the official policy of the LibDems for Britain to join the Eurozone. Christopher Huhne was co-author of this tract:

Why Britain should join the Euro: by Richard Layard, Willem Buiter, Christopher Huhne, Will Hutton, Peter Kenen and Adair Turner
http://cep.lse.ac.uk/layard/RL334D.pdf

Happily, we didn’t follow that advice.

“The immediate slap down from anonymous Treasury sources – they said he wasn’t responsible for tax policy – shows how important Vince’s statement is.”

Sadly for Vince I suspect you’re right.

Only city-backed tories…and the entire state of Sweden who funnily enough are one of the only nations qualified to judge as they actually had one.

As for the rest of the evidence it has all been pointed out in the comments above, but could I also just point out that France has seen less than half of the expected revenue from their own version of the FTT.

Well, there’s a pretty good illustration going on at the moment in France, Hungary and Italy. Let’s see whether this tax actually works before implementing it, shall we?

11. Frederick Milano

I’m a liberal democrat & am very much against this Robin Hood Tax. It steals from individuals & gives to the government. That’s not what Robin Hood did.
At a time when people need to save for their later years, adding another tax to investing in the country is incredibly short sighted & WRONG.

“Let’s see whether this tax actually works before implementing it, shall we?”

Britain has had stamp duty taxes for centuries.

I suspect the pressure from some EU member state governments has more to do with trying to extort a disproportionately large contribution from Britain into EU coffers. It just sounds so much more attractive if the proposal is wrapped in terms like: Robin Hood Tax

13. Dislecksick

“Responsible capitalism”

Yes Ed, let’s have a responsible capitalist society. Start by reducing the PS massively, selling off healthcare, education etc etc. This is NOT capitalism you fools! More people in this country rely on the public than the private sector.

14. Man on Clapham Omnibus

The real issue here is whether an industry that makes ‘ make believe’ money whilst impovershing the rest of society should be left alone in case we all get a little bit more impoverished. Personally I am in favour of the RHT simply because if we all have to buy into the same process which caused 2008 we might at least have a little benefit before the next crash occurs.

In Britain, we have already had Stamp Duty taxes on financial and property transactions for centuries.

The question is how much of the proceeds of new Financial Transactions Tax would have to go to the EU, which we mean Britain make a disproportionately large contribution because of the prominence of London as a global financial centre compared with other centres in Europe.

There are more important ways of trying to prevent a recurrence of the financial crisis – such as ring fencing retail banking from investment banking and requiring the banks to hold larger capital reserves as a cushion against losses. Neither of those measures is popular with the banks.

Correction: that should have read:

” . . which would mean Britain making a disproportionately large contribution because of the prominence of London as a global financial centre compared with other centres in Europe.”

Sorry for bad editing.

17. Ted Baumann

“MOST European governments – apart from our own – can see the value in a Robin Hood tax on the banks’ financial transactions…”

11 EU governments have joined the FTT out of 27 member states.

I don’t think we need a calculator to figure out something is not quite right here…


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