Tories call Robin Hood tax “hopelessly naive” – despite its backing by world economists

@leftfootfwd See comment on that last piece – the headline is utter nonsense, at best: http://bit.ly/9k2zhv @DavidTaylor85

@ByrneTofferings Picking them out of context too: http://bit.ly/9k2zhv

Naughty Naughty! RT @MTPT: @ByrneTofferings Picking them out of context too: http://bit.ly/9k2zhv

Thanks for the link, I posted a rather more positive blog just after – suggesting an alternative – http://cardiffblogger.co.uk/archives/let-the-bankers-help-themselves

Regards,

CB

Socialists are finding it increasingly difficult to tax us over the “climate change” issue.

They are now starting to turn their fire on banking transactions as the next and easiest massive new tax.

Where is this letter signed by 350 economists? The Oxfam blog you link to refers to it but doesn’t link to it?

Is what they are calling for what the Robin Hood Tax campaign proposes, or is it a general principle they have leant their weight behind?

Next time, read the articles you are linking to, before you create more utterly misleading headlines that discredit your journalism

Claim:
“Tories call Robin Hood tax “hopelessly naive””

Reality:
A website (Conservative Home) which supports, but isn’t part of, the Conservative Party published a comment piece by the Chief Economist of the think tank Reform.

In it he said that given the failure to agree international trade talks or the Copenhagen climate talks, it was “hopelessly naive” to think that international consensus could be reached on a global financial transaction levy.

Anyone would think you had Liam Byrne as a sub-editor.

The full quote from Patrick Nolan of Reform:

“In the almost 40 years since a Tobin tax was first proposed this idea that has never gotten off the ground. The reason for this is simple – it will never work. For it to work it would require every tax jurisdictions to agree on it. But the international community struggles to agree on trade talks (such as the failed Doha round) or on climate change (COP 15 in Copenhagen), so the idea that an international consensus will arise over a tax issue is hopelessly naive.”

Social comments and analytics for this post…

This post was mentioned on Twitter by leftfootfwd: Robin Hood tax is “hopelessly naive” say Tories despite backing by world economists writes @DavidTaylor85 http://bit.ly/aG416f @robinhood…

I’d like to thank this blog for pointing me to the Facebook page against the Robin Hood tax – it now has 32 fans.

RT @theneweconomics: Great post @leftfootfwd answering concerns about Robin Hood Tax. http://bit.ly/bb5iID #RHT

[...] Update 2: Left Foot Forward provides plenty of background to this proposal and how it is backed by more than 350 of the world’s leading economists. Well, I never knew that, but it is a good idea on its own, read more. [...]

““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.””

I know that’s what they claim. However, they’re wrong. Try looking up “tax incidence”.

BTW, Joe Stiglitz is the guy who showed back in 1980 that the incidence of a tax (the economic burden carried) can be more than 100% of the amount the tax raises.

I’m sure some reactionary people thought giving the vote to women was lunacy as well.

But just as some reactionaries say “no”, others seem to be saying “yes” without asking about the research. Most shows it’s near-impossible to implement and it won’t work. See the work undertaken by Sussex University, they write a letter to today’s Guardian.

Even its creator, James Tobin, abandoned the idea. It would have to be very high to stop speculation; then it wouldn’t raise any money. If it was very low then it wouldn’t stop excessive speculation. It’s not the great idea some think it is.

And remember the banking crisis wasn’t caused by foreign exchange movements, it was banks over-lending and the light touch regulation of London and New York. Genuine progressives should look for real reform to the banking sector and global regulation, not 0.05% tax rates.

Good piece on @leftfootfwd on tackling the critics of the Robin Hood tax: http://bit.ly/bEmm2e

@Mark – it departs a bit from Tobin’s plan by being much smaller – 0.005% against 0.5% (as well as widening out beyond currency transactions). The aim is to make something which is easier to get implemented and primarily will raise money from trading for social good around the world, rather than primarily throwing sand in the wheels as Tobin wanted. If it limits excessive speculation that’s good, but if it doesn’t it raises funds, which is good too.

RT @pickledpolitics: Good piece on @leftfootfwd on tackling the critics of the Robin Hood tax: http://bit.ly/bEmm2e

Mike: interestingly, the “Robin Hood Tax” people are at pains to distinguish themselves from Tobin’s proposal:

“The Robin Hood Tax differs fundamentally from James Tobin’s original concept as its principal motivation is the raising of revenue as opposed to being a way of regulating speculative financial activity.”
http://bit.ly/b3gUp3

This does of course further undermine the line taken by David Taylor above.

David Taylor reproduces their claim that:

“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.”
http://bit.ly/aHR1Vv

This seems to rely on an assumption that they can define “financial institution” and thereby only target the nasty evil banks and not the nice honest Trade Unionists taking their summer holidays in the Eurozone.

Given we’re in the middle of a recession caused by dodgy financial regulation (which by over-regulating certain activities and not regulating others creating some pretty obvious problems) the idea that such neat dividing lines can be drawn seems odd.

If I (as an individual) indulge in some speculative transactions, will I avoid the tax? (If holiday money is excluded, the answer must be yes). I’m not a tax lawyer, but I imagine some of my tax brethren are already sketching some speculative ideas. Borrowing a few ideas from the Lloyds Names system is one approach that immediately suggests itself to me.

I posted against it here, and I’ve yet to see a decent comeback to it. Hop to it, you ‘evidence based’ bloggers you. http://bit.ly/99XQHF

RT @leftfootfwd Robin Hood Tax "hopelessly naive" say Tories despite backing by top economists says @DavidTaylor85 http://bit.ly/aG416f #RHT

Robin Hood Tax wont impact personal or retail banking. Targets high-frequency large-volume http://bit.ly/bEmm2e (via @pickledpolitics) #RHT

RT @pickledpolitics: Good piece on @leftfootfwd on tackling the critics of the Robin Hood tax: http://bit.ly/bEmm2e

Good knock down of main criticisms of Robin Hood tax by @leftfootfwd http://goo.gl/06NN

One of the founding fathers of Socialism has a few words relevant to this subject here…..

Thanks for the comments. There’s also a fascinating exchange on Liberal Conspiracy about this topic: http://liberalconspiracy.org/2010/02/11/why-progressives-should-back-the-robin-hood-tax/#comment-104482

James – It looks like Oxfam jumped the gun but the letter is in the pipeline. We’ll be the first to post the list of names when it’s published.

Matthew – I think the headline is completely defensible. An international Robin Hood tax is, in Nolan’s words “hopelessly naive”. He also calls the revenue raising potential a “fairytale”. I don’t think we’re distorting Nolan’s view for one second.

John – excellent point.

Billy – Surely you can do better than invoking Hitler?

Thomas – Am hoping to find time to respond to your genuinely interesting blog over the weekend.

All the best,

Will

Will,

That is the point. The Tobin tax is plainly as ridiculous as Hitler.

It will be amusing to see how quickly the “Tobin-Tax-Havens” around the world get filthy rich, leaving the poorest of the world to get poorer.

……… but it will all be OK, so long as Champagne Socialists can sleep all warm and cosy at night “thinking” they have done everyone in the world a good turn.

Of course the reality is that once again socialist policies will be stiffing the poorest up the bum (just faster and on a global scale). Jesus wept.

Hi everyone,

Very sorry, I’ve been at work all afternoon so not been able to respond. I’ve got to head home now, but I will respond later this evening.

Great to see so many comments tho, glad it provoked discussion.

David

[...] word, 9,000 children in Africa with a pencil and an exercise book. David Taylor’s excellent article earlier today exposes them and rebuts their [...]

You say it will raise £400bn… actually the number should be $400bn. I suspect if the UK introduced such a tax it would indeed be £400bn, as the value of the pound would utterly tank. But let’s not worry too much about that, eh.

Will – if you think the headline is defensible, you have a fine career ahead of you with one the red tops. I note you don’t bother to address the fact Nolan isn’t speaking for the Conservatives. Your logic might work partly if you’d said “Tories call Robin Hood Tax “a fairytale”" – at least then you’d be using an accurate quote.

Ended up blogging on this this evening: http://bit.ly/aqaw4x Picks up on David’s three “Claims” towards the end.

The one he omitted is the biggie – which both Tim Worstall and Thomas Byrne identified – the fact that this tax won’t raise a fraction of the money it’s supporters claim. I’m with Nolan on the prospects for international consensus, and if we could achieve it, wasting it on a tax which won’t raise what it’s supposed to seems a strange move.

As Will said, we will link to the letter as soon as we can.

But in the meantime, here is a quote from the Robin Hood Tax campaign press release:
“The UK campaign is part of an international movement with similar calls being made in the USA, Europe and across the developing world. Gordon Brown, Angela Merkel, Nicolas Sarkozy, Nancy Pelosi, Jose Manuel Barroso, Meles Zenawi (Ethiopia) have all spoken out in recent months in support of some form of transaction tax.

Financial figures who have backed transaction taxes include Lord Turner (FSA), George Soros, Warren Buffet, Avinash Persaud (chairman of Intelligence Capital), Sir Philip Hampton, (RBS chairman) and Terry Smith (chief executive of money brokers Tullett Prebon).”

http://www.actionaid.org.uk/102311/the_robin_hood_tax___a_crisis_for_the_banks_becomes_an_opportunity_for_the_world.html

And as Owen Tudor said on this blog on Monday:

“The call for a global tax is backed in Europe by Gordon Brown, Angela Merkel and Nicholas Sarkozy. President Lula in Brazil and Prime Minister Zenawi in Ethiopia are keen. So is the Chancellor in Austria, the former head of the Bank of India, the Speaker of the US House of Representatives Nancy Pelosi. Warren Buffet and George Soros, Joe Stiglitz and Paul Krugman – financiers and nobel prize winning economists are supporters.”

So George Soros and Warren Buffet have backed a “transaction tax”. That is the only clue you should need Scooby.

Soros bet like fuck on crashing the pound to make his money. These people are happy to bet against the stability of a country for their own personal gain (and I don’t blame them).

A Tobin Tax is the ultimate one-way bet. You’d have to be really stupid, not to make money off it. Of course these people back it.

OK.

@Matthew Taylor, @Thomas Byrne – in answer to claims this “won’t raise a fraction of the money it’s supporters claim”

Let’s take the $400billion figure. Taking the research done by the RHT campaign, by Schulmeister: http://www.wifo.ac.at/wwa/servlet/wwa.upload.DownloadServlet/bdoc/WP_2009_344$.PDF

His research – based on hypothetical transaction tax receipts in the global economy 2007 – calculates that if the levy was 0.05%, the maximum range that the RHT called for (down to 0.005%), it would indeed reduce transactions by 65%. However, this would still generate 1.205% of World GDP if the reduction was ‘medium’ or to 0.682% of World GDP if the reduction was ‘high’. See page 13.

Now, if you take world GDP in 2007 to be $54.9 trillion (using these World Banks from Google’s Public Data site – http://bit.ly/aDFfHB), my calculation is that the tax would raise between $374.418 billion and $661.545 billion.

Which backs up the Robin Hood Tax claim that:

“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.”
http://robinhoodtax.org.uk/how-it-works/the-big-idea/

@MTPT Even if 0.05% was levied with a 65% reduction in transactions = still raises $374bn (0.682% of World GDP) http://tinyurl.com/yavuham

“Various experts (Schulmeister (2009) who provides a good summary of the work of others, Baker et al (2009),”

Might I suggest that people go and read those two papers? They are the actual justification for the tax after all. Once you’ve done so you can come back and run through the following logical chain.

1) We do indeed already have a financial transactions tax (FTT). Stamp Duty on shares (The Baker paper specifically uses this as its starting point).

2) Who bears the economic burden of this FTT? Well ,several pieces of research over the years (Oxcera for one) say that it’s pension funds in hte form of lower pensions and companies in hte form of higher costs for raising capital (which feeds through into lower wages or the workers).

3) OK, who will bear the eonomic burden of the proposed FTT?

Any one who says that it’ll be just the banks of the bankers needs to look very hard at point 2) again.

Tories call Robin Hood tax “hopelessly naive” – despite its backing by world economists http://bit.ly/d44ES6

Here is a link to story in Independent today about the letter.
http://www.independent.co.uk/news/business/news/hundreds-of-ecomomists-call-for-tax-on-currency-speculation-1899534.html

“Two Nobel prizewinners, including the outspoken critic of the financial system Joseph Stiglitz, and scores of professors at universities from Harvard to Kyoto, are calling on G20 governments to back a financial transactions tax on speculative dealings in foreign currencies, shares and other securities of 0.05 per cent – say £500 on a £1m transaction.”

RT @touchstoneblog: RT @leftfootfwd Robin Hood Tax "hopelessly naive" say Tories despite backing by top economists says @DavidTaylor85 http://bit.ly/aG416f #RHT

Here is the letter in full with all 350 signatories: http://robinhoodtax.org.uk/in-the-news/350-economists-call-for-a-financial-transaction-tax/