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.
What is it?
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 tax financial transactions traded through stock exchanges, futures exchanges or any other facility established for the purpose of trading ("exchange trading") by financial market actors.
"It's a tiny tax."
Who would pay?
The tax 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.
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 makes sure banks and the financial sector pay their fair share of the economic recovery."
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 billion a year, even after a drastic reduction in market activity as a result of the tax.
"This tiny tax on financial activities would raise billions for fighting poverty and climate change at home and abroad."
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.
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 in other regions including Canada and the USA. Academics, econonmists, business leaders and philantropists also support the tax.
Philanthropists and Business Community:
George Soros, Bill Gates, and Warren Buffet, among others, have voiced their support for a robin Hood Tax.
Academics and Economists:
Over 350 leading academics and economists support the tax, including:
- Joseph Stiglitz - Professor at Columbia University with a Nobel Prize in Economic Sciences.
- Paul Krugman - Distinguished Professor of Economics, City University of New York.
- Dani Rodrik - Professor of International Political Economy at the John F. Kennedy School of Government, Harvard University.
- Jeffrey Sachs - Director of The Earth Institute at Columbia University.
- Paul Volcker - former US Chairman of the Federal Reserve.
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, former French President Nicolas Sarkozy and former UK Prime Minister Gordon Brown published an oped in the New York Times outlining how the revenues generated from an Robin Hood Tax could be put towards climate change mitigation and the meeting of the MDGs.
Between December 1998 and March 1999, Canadians rallied in support of a Private Member's Motion in the House of Commons, which stated, "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 Harper government showed no leadership on the issue. Both Stephen Harper and Jim Flaherty rejected the idea of the tax, while members of all three opposition parties have shown support for a tax on financial transactions.