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THE ROBIN HOOD TAX: YOU KNOW IT MAKES SENSE

Of all the proposed solutions to the dismal state of this country's finances, the Robin Hood Tax makes most sense to us. It could raise as much as £20 billion per year in the UK alone. In short, the idea is to place a tiny tax of 0.05%on financial transactions like stocks, bonds, derivatives and foreign currency. It would only apply to organisations, so no individual would feel its effects. It could raise an estimated £250 billion per year globally to combat poverty, climate change and the economic downturn. We spoke to David Hillman, director of Stamp Out Poverty and spokesperson for the Robin Hood Tax, about the UK campaign, its origins and why the tax didn't make it into the Comprehensive Spending Review. What is the purpose of the Robin Hood Tax? The Robin Hood Tax (RHT) campaign is for greater taxation of the financial sector. We don't believe that the sector is paying its fair share. We are for taxes on financial transactions, profits, bonuses, bank balance sheets. Our research shows that the sector could afford to pay £20 billion more than it does at the moment. The government has said it will create a bank levy [tax on bank balance sheets] of £2.5 billion and we think that is scandalously low, especially since at the same time George Osborne reduced corporation tax, so it's possible that he's taking with one hand and giving with the other. We are not satisfied with this, but perhaps without the campaign there would have been no movement in that direction whatsoever. So there was some movement but it's unclear how positive that movement actually is? Yes, and there's two aspects to it. One is that the levy is insufficient in volume and secondly, what is it really going to be used for? Our demands are that 50% should be used to protect jobs and services domestically and 50% should be spent in meeting our international commitments, not least tackling climate change. What are the origins of the idea? Its origins date back to James Tobin and the 'Tobin Tax', which proposed taxing foreign currency transactions. It was a high tax that tried to change the way the market operated and prevent some of the gambling and 'hot' money that was travelling the world. Since then the market in foreign exchange has become enormous and now runs at $4 trillion (£2.5 trillion) a day. It was realised that a small tax on this volume of money would raise a vast amount and that is the seed of the RHT campaign. Who is involved in the campaign and how did you get the celebrity interest? I was able to meet with Richard Curtis and people from Comic Relief. Richard was looking for the next big campaign. He's the kind of person who can distil ideas into an excellent form for communication and he's a filmmaker so we shot the film with Bill Nighy, which was quickly followed by the second one with Sir Ben Kingsley. So after doing so much policy and media works, to make the campaign triangle function you need the popular side - you need people. This is what we've been working on with Richard and the celebrities have really gotten passionately behind the campaign. Do you have any advice for other grass roots campaigners? It's extremely good to have a tool that can be viralled and reach lots of people. When we started in February, we put a lot of effort into the development of our Facebook group, which has grown to 250,000 in a short period of time. The Bill Nighy film on the website has been seen by around a million people internationally. The use of new media is really important. What arguments against the Robin Hood Tax have you encountered? The first is usually that companies will get up and leave the country; therefore it'll do more damage than good. The answer to it is that what we are proposing is not unusual - there's already a 0.5% tax on shares, for example, and have business said they are not going to deal on the London Stock Exchange? No. In fact, it's the second largest stock exchange in the world. When Alistair Darling brought in his tax on bonuses, companies claimed their executives would quit the country, but a few months later a survey by the Times revealed that not one had actually left. Another is that it will be passed on to ordinary consumers. This is a myth. We're talking about financial transactions tax on multimillion deals with government bonds, derivatives, forwards, futures and options. How many ordinary people do that kind of trade? The suggestion that financial institutions will still pass them on then depends on how competitive their industry is. The degree to which they pass on the cost will lead to their business going down. This is a very progressive form of taxation that will land on the richest players, not on the public. Is it something that has to be instituted globally to be effective? Some argue that you have to do it everywhere and if you don't all trade will just migrate to where the tax doesn't exist. We can see from the stock market example that's not the case, and it also depends on the design of the tax and whether there are global settlement systems in place. In foreign exchange, for instance, there is the Continuous Linked Settlement (CLS) Bank and 95% of all trades go through it, so if the government creates a tax it will be collected there. The claim that it has to be implemented everywhere or not at all is just a blocking argument. Over the last few decades, financial transaction taxes have been established in more than forty countries on temporary or permanent bases. The RHT is a realistic aim within a system of financial capitalism. Is this because you are comfortable with the system as a whole, or because you wanted to make your goals more achievable than a complete overhaul? It would be a mistake to see this as some kind of panacea. It is not about transforming capitalism. There are many deep-seated arguments about the nature of the continuation of power through elites and higher returns for capital rather than labour. These arguments will continue and probably become more heated as we feel the effects of the recession, but this particular campaign is not specifically addressing that area. It is saying here is a sector that has been living on Easy Street for thirty years and right now we need the public purse to have more money, which should not just be happening through cuts to services but through increasing the amount of taxation. Do you feel that financial institutions are solely responsible for the current crisis? They are clearly the most complicit; they were allowed to be so by governments that had essentially taken their eye off the ball. A good example is the credit default swaps market, which rose from almost nothing to being the size of the world economy with no regulation at all. That was one of the key causes of the crisis. Clearly a certain amount of blame needs to fall at the government's door, because it wasn't doing its job. Conversely, the market was completely irresponsible in creating products that could so spectacularly fail, causing governments to have to intervene on an unprecedented level. A particularly ironic government intervention, since this sector normally argues against such things, doesn't it? Equally ironic was the fact that, under the Bush administration, the US nationalised [mortgage firms] Fannie Mae and Freddie Mac. Of course, they wouldn't use the word nationalised, but that is what happened. I think at a deeper level the real crisis for neo-liberalism was that the market could not save itself. Given that crisis for neo-liberalism and its philosophy, do you think it will lead to more comprehensive change? What's really worrying is that it appears to be just carrying on regardless. We've met with people on the Treasury Select Committee and it appears we're in just as dangerous a situation now as we were before and that the rule changes Obama has pushed through are not deep enough. There is the new, very dangerous problem of high frequency trading, which has already led to a flash crash in America. This is where computer algorithms chase price trends at high speed and can move huge volumes of money, which is totally destabilising. My feeling is that the root causes have not yet been changed sufficiently. What barriers prevented the inclusion of the RHT in the comprehensive spending review? The coalition has said they will look at a financial activities tax, which has the wonderful acronym of FAT. The FAT tax for fat cats, as we like to look at it, would be a tax on profits and remunerations. We know the Treasury has created a team to look at how to implement this and we are pressing to find out what their timetable is. We think we should have seen a taxing of the banking sector in the review of £20 billion and so that is an opportunity missed, but in terms of the campaign it simply means we have to redouble our efforts, focus on increasing the bank levy and going after profits and remunerations, then getting the rest of the £20 billion from a FAT tax. Around the time of the review, we got a lot of media coverage and carried out stunts outside the Treasury office, boosting our number of supporters by 11, 000 in two days. Clearly, there's an appetite to move this forward. Are there international RHT campaigns? Yes there are. I was speaking to people from Norway only yesterday, who have just launched their campaign. There are campaigns in Australia, where they have a kangaroo in a green mask as their logo. There's also '00 Cinque' in Italy and 'Steuer Gagen Armut' in Germany. In the US it's not specifically a Robin Hood Tax campaign, more a campaign against financial speculation that brings together the trade unions, development and health NGOs and the green movement, who have not been natural bedfellows before so it's taken a lot of work. France is coming together well because President Sarkozy, despite his unpopular pension reforms, has gone out on a limb to support the financial transaction tax internationally and is one of the leaders who may champion it next year. Given the French G8 and G20 votes, developing a strong campaign there is very important at the moment. What can people in Britain do to help? Go to the website, watch the films, and join the Facebook groups. We encourage everyone to write to their MPs. The argument the government gives is that we're all in this together. It isn't fair that we are going to be paying increased VAT from January and the banks are getting away scot free. That's our message, and people should ask their MPs what they will do about making the banks pay their fair share. We need to keep the pressure on. robinhoodtax.org.uk )

Next article in issue 33

DEDUCTIONS: HOW OUR TAXES COULD BE SPENT

I think it's time that we, the people, decide what our taxes are spent on. A bold statement, I know, but allow me to elaborate. Each month, …

I think it's time that we, the people, decide what our taxes are spent on. A bold statement, I know, but allow me to elaborate. Each month, 

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