On the IMF report on a financial transactions tax

Owen Tudor and Richard Murphy both claim that the IMF\’s report out today supports their case for a financial transactions tax.

Sadly they\’re both blathering (if not in fact being deliberately obtuse to the point of mendacity).

This is the same report that was leaked a couple of months back. My response is here.

What the IMF actually tells us is that an FTT (ie, The Robin Hood Tax) would not in fact reduce volatility and could well increase it, would not in fact be paid either by banks or capital but by workers in the long term and that there are better ways to achieve the desired goals anyway.

This is not what I would call an endorsement of their mitherings.

Don\’t let them get away with their \”spin\” (\”spin\”, in this case being properly defined as \”being deliberately obtuse to the point of mendacity\”).

4 thoughts on “On the IMF report on a financial transactions tax”

  1. Tim, I expect better of you. In condemning ME for spinning or inaccurately reporting something, you have done precisely that to me.

    I DIDN’T say that the IMF supports my case for an FTT, I addressed the IMF’s criticism about volatility directly (I think they’re wrong, but I didn’t hide the disagreement) and I DID say that they prefer an FAT to an FTT.

    What I did say was that they admit an FTT is feasible, they listed the countries which have an element of an FTT, and that the paper says that the broader the tax, the more effective it would be. Each of which is absolutely true of the paper I cited.

    An apology is in order I think.

    Tim adds: You open your post with:

    “Yesterday the IMF finally released its study on the financial transactions tax. The paper, a draft of which was leaked a month ago, admits that an FTT is possible, lists the 16 G20 countries who already have one in a limited form, and admits that the more transactions it covers the more effective it will be.”

    That’s certainly putting a positive spin on it.

    “The only objection still standing in the way of a G20 decision to implement an FTT is lack of political will.”

    Well, no, it isn’t, is it? The real objection, the one I’ve been making all along, the one you and Murphy steadfastly refuse to address and which you do not ackowledge at all in your post is that it will be the workers who pay this tax. The tax incidence thing.

    It won’t be a tax on the banks, it won’t be a tax on shareholders, rich bankers or capital: it’ll be a tax on the wages of the workers. Which sounds like an excellent reason not to have the tax. And as you’ve decided not to mention it, the real killer blow to your campaign, I stand by my opinion that you are being deliberately obtuse to the point of mendacity. An opinion which is unlikely to change until you do address this simple and basic economic fact. The tax will be paid by the average worker, won’t it?

  2. You have a strange definition of spinning. I said where the IMF agreed with me, and where they disagreed. I think it’s acceptable for me to have explained why I disagree with what they say without explaining why YOU think they’re wrong to agree with me!

    I didn’t mention incidence because it’s not a major part of the IMF report I was discussing (actually I am not even sure they mention it and am too busy today to go back and check). They, like the European Commission who accepted last week that an FTT would be progressive, ie fall disproportionately on the richest, have accepted this point. It was covered in the IPPR paper from months ago, and, I believe, several other papers.

    You continue to claim that I have never responded to your view on this matter, but in fact I have, several times. Briefly, some of an FTT would indeed be passed on. Most of it wouldn’t. It is certainly more progressive than – for example – increases in VAT or public service cuts or any other alternatives.

    I don’t know how many more times I have to repeat that for you to accept that we have, indeed, responded to your point. And I don’t know what you would accept as proof that you are wrong about the incidence of the tax. Clearly we disagree, but I don’t lie about what you say on the subject and expect the same bnehaviour from you. Please just accept that we disagree.

  3. Sorry for the tardy response, Tim, but I have been too busy to reply until now. Your latest rebuttal is, as I am sure you know, a partial quote. The paragraph that you cite refers (a) to the impact of an STT on “a small, open economy”, and (b) says that the burden would fall on workers only if capital supply is perfectly elastic. You could argue that one of these two conditions was met if we had a unilateral Robin Hood Tax (although the other condition would need to be met for the criticism to be valid), which does suggest that a global or EU level initiative would be better (as we have always argued), although I doubt that the UK could really be considered as a small economy without stretching the definition of small to exclude all but the largest 4 or 5 world economies!

Leave a Reply

Your email address will not be published. Required fields are marked *