On the Robin Hood Tax

You know, looking at the list of supporters, there\’s only one who even pretends to have any knowledge of economics.

That\’s the new economics foundation.

It\’s going to be a complete disaster, isn\’t it?

Oh, here\’s a lovely little point.

Although 0.05% is a tiny tax, $400 billion is a substantial amount.

That\’s what they expect to raise (not the £400 billion some papers are reporting).

Banking is the most profitable industry in the world, with profits of $788 billion in 2006,

They\’re seriously suggesting that 50% of the profits of the banking system can be taxed away and:

Will the tax be passed on to consumers?

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.

They\’re fucking mad, aren\’t they?

28 comments on “On the Robin Hood Tax

  1. Absolutely bloody barking.

    Usual suspects there. We stopped giving to these advocacy charities a long time ago. I’m glad to see none of our current charities is listed.

  2. What a great list of charities. There’s a starting point for the new government: go through the books and cut the funding from any of those on the list.

  3. *ahem*

    The real point is that most of these trades have a profit margin of less than 0.05%, therefore with the tax, the trades won’t happen and there’ll be nothing to tax. Unlike corporation tax which collects 28% (or whatever) of the net profit, no matter how narrow the margin.

    The same logic applies to VAT, which makes vast swathes of business activity yielding a profit margin of less than 17.5% unviable (bearing in mind that most businesses are happy with a net profit margin of 5% to 10%).

    At least with corporation tax, a good pre-tax decision is (usually) a good post-tax decision, not so with VAT – if you are a bit naive and buy stuff for £100 from a business (so we can ignore input VAT) and sell it to consumers for £110, this is still worth doing even if you have to hand over £2.80 corp tax.

    It is not worth doing if you have to hand over £16.38 in VAT.

  4. Pingback: Robin Hood Tax and other fairytails! « F0ul Thoughts

  5. Bono’s group are behind it. You’d think that he’d understand about the migration of businesses as U2 moved some of their business to the Netherlands for tax reasons.

  6. “The real point is that most of these trades have a profit margin of less than 0.05%, therefore with the tax, the trades won’t happen and there’ll be nothing to tax”

    But we know from the Government’s policy on income tax that it is morally superior to raise 50% of nothing than 40% of quite a lot.

  7. Mark, I think your VAT example is wrong. You’d only have to hand over the VAT if you were VAT -registered, in which case, you could also claim back the VAT that was charged when you bought the item, so it would only cost you £85.11. So, when you sell it for £110, you’d get to keep £93.61, a profit of £8.50.
    If you’re not VAT-registered, you couldn’t claim back the VAT on the purchase, but you also wouldn’t have to hand it over when you sell the item.

  8. Aw, that’s really quite sweet of them – they are paying so much attention to your site, Tim, that they’ve now corrected the spelling.

    Still mad, though.

  9. Jonathan: “Mark, I think your VAT example is wrong. You’d only have to hand over the VAT if you were VAT -registered…”

    Obviously I’m assuming VAT registered.

    “… in which case, you could also claim back the VAT that was charged when you bought the item, so it would only cost you £85.11.”

    Which is why I said purchase price £100 ignoring input VAT, assume £100 net of VAT.

    “So, when you sell it for £110, you’d get to keep £93.61, a profit of £8.50.”

    No, you make a loss of £6.38 as I explained.

    “If you’re not VAT-registered, you couldn’t claim back the VAT on the purchase, but you also wouldn’t have to hand it over when you sell the item.”

    In which case you make a loss of £7.50, but there’s no point trying to justify the non-logic of VAT by referring to exempt traders.

    Compare this with a VAT-free world, it’s nice and simple, if you can buy for £100 and sell for £110 you are in profit.

    Go and look up Ricardo’s Law Of Comparative Advantage. Most exchanges make people better off, however narrow the margin. Then ask what happens if all exchanges that generate a surplus to the parties of less than 17.5% are effectively made illegal.

  10. When folk start claiming that imposing a new tax will not affect anyone apart from a designated range of victims, I smell BS. These idiots must take us all for fools.

  11. Hi Tim,

    where did you get the $788 billion figure from? I can’t find it on the website. Heck, Google can’t find it on the website, and there’s no cached version.

  12. Ah, thanks Philip. Didn’t see the catch-me-if-you-can sub-index.

    From the same page, they reckon they’ll raise $400 billion globally, then spend $200 billion domestically (to pay for bailing out the banks) and the rest on international development and ‘adapting to climate change’.

    Where the hell did they come from?

  13. Perhaps, taking the example of one of the promoters of this insane idea, Comic Relief could try spending some of the £78 million in reserves it is currently sitting on before pleading that they need to raise new money from theft, and whilst spouting nonsense about making traders use ‘safer’ investments, follow their own advice in order to not lose £8m on investments, like they did last year.

  14. One of the main supporters is Lord Turner, Chairman of the UK “Independent” Committee on Climate Change that advises the Government on its climate legislation. On the 4th of February 2009, he told the House of Commons Environmental Audit Committee (EAC) that: –

    “The core (of the UK Climate Act} is contract and converge. We cannot imagine a global deal which is both doable and fair which doesn’t end up by mid-century with roughly equal rights per capita to emit and that is clearly said in the report.

    From blue chips to the green dream Nick Mathiason The Observer, Sunday 3 February 2008,
    http://www.guardian.co.uk/environment/2008/feb/03/climatechange

    Adair Turner, former CBI boss and now Britain’s climate change tsar, tells Nick Mathiason why carbon reduction must begin at home.

    With a CV that includes oil giant BP, a long spell at management consultancy McKinsey, and, at 39, boss of the CBI, Turner will now tell the government whether it is on track to meet tough carbon dioxide reduction commitments and what it must do if, as likely, it falls short.

    His first priority is to establish whether the government’s 60 per cent cut by 2050 is enough. He will also give clear indications as to what the country must achieve by 2020.

    In a new collection of essays called Do Good Lives Have to Cost the Earth, Turner argues that ‘growth has to be dethroned’ if the planet is to survive surging population growth and global warming.

    He has spoken in favour of global taxation, (the “Tobin Tax”). http://tiny.cc/tziLX

    The idea of taxing financial transactions is ascribed to Yale professor and Nobel laureate James Tobin. Lord Turner’s suggestion and the Tobin tax are, in fact, distinct. Tobin was satisfied to tax foreign exchange transactions only. Lord Turner appears to advocate for a much broader tax on global financial transactions, which have supposedly become inflated and “useless” from a socio-economic point of view.

    What they have in common, however, is that they would be the first truly “global taxes.” This would require cooperation at a supra-national level, with all its political intricacies.

    Tories want to put Lord Turner in charge of curbs at the Bank
    http://www.timesonline.co.uk/tol/news/politics/article6870298.ece

  15. Maybe we should simple help those parasitic nihilists find their final salvation and destroy the very system that feeds them, it would solve the problem at base…

    Everything seems to have a lifespan that is determined by the ability to copy successful concepts faithfully, and by keeping out pests — nature almost always starts over from scratch with a new organism that is better designed instead of faffing around with a moribund failure.

    I think that this is the case with our systems, they are at the end of their natural life and repairing the infestation of incorrigible fools and their demented ideas is taking way more energy than rebuilding will do.

    So, bring on the Tobin tax and let’s enjoy the ultimate golden goose roast… because an end with a fright is better than a fright without and end.

  16. I didn’t know UKIP was so in bed with the Banks.
    Lets forget where the money would be spent for the moment because that would be up to the Government of the moment( perhaps to help our own industry would be a novel idea). If anyone out there thinks the banks have any loyalty to this or any other country it is they who are in fairy land. Someone commented on Pensions well unless you have an old job with the Government or public services I am afraid to tell you its probably worth F***K all. Big business and that includes big banks look at all of us as fodder just to be grazed upon. We need a Government that will support small businesses and those businesses truly based in this country not those just with a head office here and all their production in Poland. Do you really think that once all our jobs are gone, our farmers impoverished and our heavy industry destroyed these same big businesses and banks are going to help us all out. I THINK NOT. Its time to take back control of our own country and its peoples jobs both from Europe and the even bigger transnational companies and even bigger banks.
    Some hope when most politicians look for those same big companies to give them jobs when we find out how useless they are. Perhaps someone can let me know which politicians come from companies they have run and employed British people or moved into jobs after politics in anything other than consultancy type positions.
    Regards
    Steve

  17. “That’s the new economics foundation.”

    They were getting ink yesterday for suggesting a 21-hour (3-day) working week – “who wouldn’t want a four-day weekend?” they say.

    Given that they’re a radical left organisation, I’d say their economics are just as suspect as the others on the list…

  18. Evelyn – £3.6 billion is traded every day on the foreign exchange market. A third of that is done in the UK. In a market which is less and less tied down to one location do you really think they will hang around while we take £60 million a day of which only half at tops will ever stay in the domestic market. No!

    Also speaking as a ex-biochemist in the 4.5 billion year history of earth nature has only started afresh once. We aren’t better designed, we are simply the best of the worst

  19. Your main point here seems to be that the NGOs promoting this proposal are intellectually naive, that the only economists who might have been involved in this are the NEF and that overall these NGOs are peddling something with zero academic rigor.

    So, how about you learn some rigor yourself by starting out with some basic research?

    A quick google search of the reference given by the group for their $400bn revenue figure turns up this source amongst others:

    http://www.wifo.ac.at/wwa/servlet/wwa.upload.DownloadServlet/bdoc/PRIVATE46955/WP_2009_344$.PDF

    A 20 page working paper on the proposal by what appears to be a financial economist, one of several he has written on this very tax.

    And now some background explanation. NGOs rely on academics in consultancies and universities for much of their research. This means that just because they don’t have 10 in-house economists doesn’t mean they are not utilising significant academic work.

    Finally here’s a task. Why don’t you prove that you are actually interested in thinking about these issues in a sophisticated way? Have an honest look at the background academic arguments. Then we can see if you can do any rigorous thinking yourself.

    I dare you all!

  20. I am with you Steve Weedon and Phil Ruse.

    We don’t need big banks to run our county for the rich, we need small local banks to help support our communities and small businesses.

    I am sure banks will find away out of paying even the smallest tax, while we get penalised to pay 17.5%, there really is no justice for normal human kind who care about the world and our families.

    You rich people have so much money you just can’t bare to let it go!
    Why don’t you stop being so self obsessed and think about the rest of the population struggling to make a living, or are you so immoral that you don’t give a shit???

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