May 18, 2012

A tax whose time has come

If Gandhi's chronology of 'first they ignore you, then they laugh at you, then they fight you, then you win' is anything to go by, the Robin Hood Tax campaign is getting close to its goal.  When it was launched two years ago, the idea of taxing the banks was unimaginable; now it's taken giant leaps towards reality.

As the the G8 leaders meet today and tomorrow in Camp David, campaigners from around 30 countries around the world have been carrying out a series of events for the Robin Hood Tax Global Week of Action to remind leaders that the time for a Financial Transaction Tax is now.

The Robin Hood Tax campaign has been staggeringly successful in several respects. When the idea began to surface in 2010 – Gordon Brown’s intervention at the G20 Finance Ministerial in the fall – it was obviously an old one in some ways: John Maynard Keynes first proposed a transactions tax in 1936 and James Tobin had suggested a currency transactions tax in 1973. But the relatively recent rapid growth of the derivatives market meant that the call for a Robin Hood Tax or Financial Transactions Tax (FTT) was qualitatively new, especially because for the first time it would be not just a market regulator – as Keynes and Tobin had proposed – but a major money-spinner. And as the IMF have reported, at least 16 of the G20 economies have had some form of FTT in place over the last decade or two.

The call for a full-blooded FTT – shares, derivatives, currency – was initially slammed by the IMF, the Financial Times (mostly by omission), and many commentators. But our massive popular appeal (a global movement representing over 220 million people, and majority support in polls across western Europe) got us through the front door of the media, governments and international institutions. And it's not just popular support, over a thousand economists have backed the idea including Joseph Stiglitz and Jeffrey Sachs. The idea continued to gain support with Bill Gates, the Vatican, Archbishop Rowan Williams, Kofi Annan and Ban Ki-Moon all signing on.

Two major multilateral institutions, the IMF and the European Commission, have been converted from slamming the idea as unrealistic to admitting that it is feasible and progressive.  And as concern over speculation has grown, those worried about such things have become more supportive (most recently UNCTAD (see Roy Culpeper’s blog), who have backed an FTT to tackle commodity speculation, following UNAIDS lead last summer). The European Parliament, the French, German and Spanish Parliaments have all recently carried resolutions supporting an FTT. So has Brazil’s, the joint ACP-EU Parliamentary Assembly, and Francophone African Finance Ministers. The Governments of Austria, Belgium, Bolivia, Brazil, Finland, Greece, Italy, Luxemburg, Slovakia, Spain, and South Africa are also in favour.

At international events on development or climate change (such as today’s G8 meeting and the upcoming Rio Conference) there will be Robin Hood tax campaigners present, and this month’s Global Week of Action follows on from earlier events in May 2010 and February 2011.

Not everyone is convinced, and there are still arguments to be had about how to implement an FTT and when, rather than whether such a tax is feasible or not. Some people won’t support an FTT until those technical details have been ironed out, while others accept that – as with almost every other tax – those are questions to be determined once the principle has been adopted and the tax piloted.

So here’s the timetable. Today and tomorrow G8 leaders will meet in their annual summit; four out of the eight countries there support the tax. This is followed by the G20 and Rio+20 Summit. Following this, at the end of June, Finance Ministers from across Europe will meet to start taking this idea from discussion to reality.  As the global economy continues to struggle, all eyes will be on world leaders to fix the system at these upcoming  meetings and by curbing casino capitalism Robin Hood taxes will help do that, in addition to raising tens of billions to help the world's poorest people.

So where does Canada stand?

Canada opposes the idea not because it isn’t feasible – which it is. Not because it would distort markets – which it wouldn’t. Not because some traders in the Canadian stock market aren’t supportive – which they are. Not because the money isn’t needed – such a tax could generate $650 bn globally (see chart below) for development and climate finance, potentially filling the gap in recent Canadian aid cuts or helping fight poverty at home. They oppose it because of three letters: t-a-x.

It is up to all of us to make enough noise to ensure whatever tax they agree is ambitious enough, with the revenue raised going to good causes to ensure any new tax is worthy of the name Robin Hood Tax. We can't win the war and lose the battle.

It will take 2012 and maybe 2013 for those taxes to be introduced, and a couple more years before it becomes clear enough that the sky has not fallen for other governments to realise either that they now have cover to be brave, or reason to catch up.

As an economic storm once again threatens to engulf the world economy, all eyes will be on world leaders to fix the system; by curbing casino capitalism Robin Hood taxes will help do that, in addition to raising tens of billions to help the world's poorest people.

Ideas this good don’t come along every day. And when they do, they’re too powerful to ignore.

This blog was written by Robin Hood.  The opinions expressed are his own, and do not necessarily reflect the views of CCIC or its members.

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