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Nonsense about the Robin Hood Tax again

According to the European commission’s impact assessment, the 11-country financial transaction tax will generate in the region of €34bn a year.

According to the EU the RHT would have a negative net yield. Why is it that people ignore this?

10 thoughts on “Nonsense about the Robin Hood Tax again”

  1. Are liberal retards every going to pay the price of the damage that their deranged views cause?

  2. The Tobin tax will benefit the EU at the expense of member nations. No surprise then that the EU thinks it is positive.

  3. “generate” here means “raise” – 34bn euros is an estimate of what revenue an FTT might deliver.

    Almost any tax will have a negative direct effect on growth. Spending the revenue raised on almost anything will have a positive effect on growth. The question is which taxes deliver the most revenue for their negative impact, and how that compares to the positive impact of spending the money raised.

  4. “Spending the revenue raised on almost anything will have a positive effect on growth.”
    I’d love to see that proved. A proportion of the revenue raised is going to come out of what would have been spending, for a start. Somehow, I’d be minded people spend their own money more effectively than the EU would spend it.

  5. Pingback: Robin Hood Tax: Another bad European idea start that will find its way here |

  6. What bloke in spain said.

    PaulB – what do you think will happen to that money if the EU doesn’t grab it? Will it be hidden under mattresses, or spent, saved and invested, thus spreading the wealth and creating growth?

  7. bis, Steve: I understand your point, hence my reference to the negative impact of taxation.

    The EU’s claim is that by spending the revenue on “growth-enhancing public investment” it can cancel out the negative growth effects. That’s the argument that needs to be addressed.

    Tim adds: That is an argument in favour of a general rise in the level of taxation, not an argument in favour of this particular tax. And you can indeed argue that a rise in the general level is warranted on these grounds. For at some margins it is actually true. The first 5% of GDP that is spent on government probably does, or at least can, increase the level of GDP, providing it is spent on things like a decent justice system etc.

    To say that at this margin a general rise in tax take will be GDP enhancing is more controversial. But it’s an argument that can be made.

    But it isn’t an argument for this particular tax. Especially since a transactions tax has a greater deadweight effect than almost any other form of taxation. A rise in VAT, to raise the same revenue to be spent on the same GDP enhancing infrastructure, would destroy less GDP in the raising of it than this FTT would. So, even if a rise in tax levels and spending would be GDP enhancing we’d get more of it from a rise in land value taxation, from a rise in VAT, from a rise in income taxes, hell, even from a rise in capital taxation, than we would from an FTT. Thus, if your argument is that a rise in revenue would be GDP enhancing then an FTT is still contra indicated. Because it’s the most inefficient method of raising the revenue in terms of the GDP destroyed by the raising.

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