Tyler, the Tobin tax would not smash financial profitability. The whole point of the scheme is to curb risky and short-term speculative trading, and thus protect the long-term profitability of the financial and international currency markets. This will help to reduce the volatility and insecurity in the financial system, and encourage more sustainable currency trading. I don’t dispute that this will be difficult to establish, but there is a global appetite for a new financial structure and it would only take a few big financial centre’s to get on board for this to get going. You state this counts for a huge % share of UK GDP, but that is no reason not to support this idea. If anything, it makes the case for it even more compelling as it demonstrates just how exposed and over-leveraged the national economy is to the financial industry. The Tobin tax will help generate the funds necessary to protect the economy in the event of a future collapse, and also contribute billions to global aid, development, and climate change efforts, bringing back a sense of ‘social value’ to the financial industry.

The Austrian government recently conducted a study into this idea, and concluded that an international levy on financial transactions at a rate of 0.05%, would generate $750 billion globally. Britain itself would collect $100 billion. This is based on the implausible scenario that there is a 2/3 drop in financial trading. So as you can see, the international community could generate huge amounts of revenue from this.

Also, countries if they choose to, can successfully take unilateral action on this to protect their economies. For instance, Brazil has just adopted what is seen to be the first Tobin tax on foreign investment portfolios. A 2% levy on all foreign financial investment inflows into Brazil will help to reduce hot money inflows and unwanted speculative trading. And Russia recently announced that they were now looking at adopting a targeted tax on financial transactions, so the momentum and support for this initiative is building.

Sounds like an idea only Labour could really have.

This post was mentioned on Twitter by leftfootfwd: The Tobin tax does have support, Mr Hague http://bit.ly/9a3eNC...