The exponential growth of the financial sector with a focus on short-term speculative gain has created a ‘casino economy’. With the bursting of the most recent bubble, millions of men and women have lost their jobs. People all over the world have been plunged further into poverty and a hundred million more people are hungry today.

G20 governments have mobilized hundreds of billions of dollars to save the banks and the financial system. At the same time, neither the social impacts of the crisis, nor the growing crises generated by climate change are being addressed with the political urgency and the necessary financial resources they deserve. Financial services corporations benefited for decades from the absence of meaningful regulation and are largely responsible for the crisis. We believe it is time for them to pay their fair share of the costs of recovery.
The Robin Hood Tax, also known as the Financial Transaction Tax, would be the most effective instrument to secure this.

The Robin Hood Tax would:

• raise billions of dollars for fighting poverty and climate change at home and abroad.
• make sure banks and the financial sector pay their fair share of the economic recovery.
• help curb destabilizing financial speculation.

This year France is hosting the G20 Summit and President Sarkozy has made securing agreement on implementing a Financial Transaction Tax a top priority.

The Facts About The Robin Hood Tax

What is it?

"It’s a tiny tax"

The Robin Hood Tax is a tiny tax (0.05%) that would be levied on all financial market transactions in order to raise resources for fighting poverty and climate change at home and abroad. It would cover financial transactions traded through stock exchanges, futures exchanges or any other facility established for the purpose of trading ("exchange trading") by financial market actors.

Who would pay?

"It makes sure banks and the financial sector pay their fair share of the economic recovery."

It would levy transactions involving stocks, bonds, foreign exchange, and derivatives (including trade of futures and options related to stocks, interest rate securities, currencies and commodities).

It would be limited to transactions between financial market actors. Ordinary consumer transactions such as payments for goods, paychecks and cross-border remittances would not be subject to the Robin Hood Tax. Short-term inter-bank lending and central bank operations would also be excluded from the Robin Hood Tax.

Why?

"It could even help curb destabilizing financial speculation."

There is excessive trading activity in modern markets due to the predominance of short-term speculation. A uniform tax per transaction makes short-term speculation more expensive. A transaction tax should therefore have a stabilizing effect on asset prices and would thereby improve the overall macroeconomic performance and help to prevent another crisis.

It would also tax the one sector that, as former French President Jacques Chirac has noted, is still relatively exempt from paying their fair share of taxes and shift the burden of crisis resolution from the general public to the financial sector.

How much?

"This tiny tax on financial activities would raise billions for fighting poverty and climate change at home and abroad."

A transaction tax would provide governments with considerable revenues, which could be used for fulfilling social policy goals. The Austrian Institute for Economic Research has estimated that a

 global transactions tax of 0.05% could yield around $650 bn a year, even after a drastic reduction in market activity as a result of the tax.

For what?

These revenues could be used for stimulus packages North and South, as deficits and public debts balloon, and to help fill the funding shortfall for achieving the Millennium Development Goals and supporting developing countries in their climate change adaptation efforts and their transitions to greener economies.

How?

The money would be collected in the individual stock exchanges where trading occurs through the electronic settlement systems used on all important exchanges. Ideally, the Robin Hood Tax would be introduced globally, but this does not preclude countries from introducing it unilaterally. 

When?

The Robin Hood Tax will be an important part of the G20 agenda this summer in Toronto, Canada. It is up to you to write to your Ministers to stimulate ground up support for this important measure!

Who Supports The Robin Hood Tax?

Much of the support for a robin Hood Tax has been centered in Europe. There is also strong support for the measure in other regions of the globe, and within the academic community.

Governments and Policy Makers:

France, Germany, the United Kingdom, Japan, Austria, and Belgium, all support the Robin Hood Tax. The United States is warming up to it, as is Brazil. The EU parliament and European Commission have spoken out in favour of the Robin Hood Tax. Former Governor of the Reserve Bank of India, Yaga Reddy, came out in favour of the tax in March.

In fact, French President Sarkozy and UK Prime Minister Brown recently published an op-ed in the New York Times outlining how the revenues generated from a robin Hood Tax could be put towards climate change mitigation and the meeting of the MDGs.

Adair Turner, the head of the British Financial Services Authority, which regulates the world’s second largest banking center after New York, said that he is "happy to consider taxes on financial transactions".

Academics and Economists:

Over 350 academics and economists, including Joseph Stiglitz, Paul Krugman, Dani Rodrik, Jeffrey Sachs, and Paul Volcker, former US Federal reserve Chair, support the idea.

Philanthropists and Business Community:

George Soros and Warren Buffet, among others, have voiced their support for a robin Hood Tax.

Canadian Context

Between December 1998 and March 1999, Canadians rallied in support of a Private Member's Motion in the House of Commons, which stated, "that in the opinion of the House, the government should enact a tax on financial transactions in concert with the international community."

As a result of widespread public support, the motion passed by a resounding margin of 164-83 on March 23, 1999. Canada became the first country in the world to declare its intention to work towards the adoption of a tax to control international currency speculation.

Unfortunately, the current government is showing no leadership on the issue.  Stephen Harper and Jim Flaherty have both as yet rejected the idea of the tax.

Members of all three opposition parties have shown support for a tax on financial transactions.