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Entries tagged "robin hood tax"Page Previous 1 • 2 • 3 • 4 Next
February 12, 2013 · By Janet Redman
Europe has taken a bold leap forward to implement an innovative plan that could help protect people and the planet. Poised to set an example of climate leadership for the developed world, will countries like the United States come along?
At the end of January European Union finance ministers approved a proposal by eleven EU member states to implement a coordinated financial transaction tax (FTT) — a tiny tax on trades of stocks, bonds, and derivatives. Through a process known as “enhanced cooperation,” this subset of EU countries (dubbed the EU11) was able to move forward with a common tax policy without having to include all 27 EU member states. The European Parliament gave the proposal a green light in December 2012, and the EU Council waved it forward at their meeting last month without a vote because of overwhelming support among member states.
EU tax commissioner and FTT proponent Algirdas Šemeta called it "a major milestone.”
The next step in making the FTT proposal a reality is for the eleven member states in the “coalition of the willing” to agree to details of the common tax. Negotiations are expected to wrap up and a formal agreement officially approved by the European Parliament in 2013.
The implications are potentially huge for climate finance. That’s the money that communities in developing countries need to make the transition from climate-vulnerable to climate-resilient, and from dirty energy development to low-carbon development.
The cost of that shift is measured in the hundreds of billions (some say trillions) of dollars. Rich industrialized countries have promised to deliver $100 billion a year by 2020. A fraction of what’s needed, but still a big lift compared to today’s levels of around $10 billion a year (if you count generously).
At the tax rate originally proposed by the EU Commission of a harmonized minimum 0.1 percent for stocks and bonds and 0.01 percent on derivatives, the EU11 FTT has the potential to raise up to €37 billion (nearly $50 billion in US dollars) every year.
France, which implemented a financial transaction tax in August 2012, has already made a commitment to direct 10 percent of the tax revenue to global public goods like development, health, and climate change (3.7 percent is destined for the Green Climate Fund). Members of Germany’s Social Democrat party have made general political murmurs that if they succeed in upcoming elections they will send revenue from an FTT to development to help meet the country’s 0.7 percent ODA goal.
Global campaigners are pushing the EU11 to be ambitious in targeting a significant portion of their FTT revenue to fight climate chaos. Members of the Pan African Climate Justice Alliance used the recent 2012 global climate summit to call for the eleven countries to deposit 25 percent of the money raised into the Green Climate Fund. Representatives in the EU parliament and from developing countries are also calling for FTT revenue to be used by developed countries to meet their mid-term and long-term financing obligations.
With Timothy Geithner stepping down as Secretary of Treasury there’s renewed optimism that the Obama administration might support an FTT under Jack Lew’s leadership of the Department. Supporters of the tax are planning to raise the issue at Lew’s confirmation hearing in Washington DC tomorrow.
This would be a move that experts like Joseph Stiglitz endorse, who said, “as Mr. Obama’s second term begins, we must all face the fact that our country cannot quickly, meaningfully recover without policies that directly address inequality. What’s needed is… a more progressive tax system and a tax on financial speculation.”
An FTT that raises revenue for a fund that supports developing countries in dealing with the disproportionate impacts visited upon them by climate change is an important step in fighting global inequality. Here, the EU11 can be a global leader.
 The 11 EU member states that have entered into enhanced cooperation are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. Any other member state may join the enhanced cooperation if they wish.
January 23, 2013 · By Sarah Anderson
EU finance ministers were scheduled to vote January 22 on whether to authorize 11 member states to proceed with the introduction of a financial transaction tax (FTT). As it turned out, the ministers didn’t even have to take a formal vote because it was obvious that there was sufficient support to move ahead.
The 11 countries are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. It will be possible for other governments to opt in at a later date. And in fact, the Netherlands has expressed interested, but they want to negotiate an exemption for their pension funds.
The next step is for the European Commission to make a proposal for the tax. The proposal will be based on one introduced by the Commission in September 2011 that would apply a 0.1% tax rate on trades of stocks and bonds and a 0.01% rate for derivatives trades. As described in the European Council statement released today, the aim of this proposal is “for the financial industry to make a fair contribution to tax revenues, whilst also creating a disincentive for transactions that do not enhance the efficiency of financial markets.”
The proposed tax is based on the “residence principle,” meaning that a financial transaction would be taxed in each case where a resident of one of the participating EU member states was involved even if the transaction was carried out in a country that is not a participant.
The tax proposal will have to be adopted by unanimous agreement of the participating member states. EU Tax Commissioner Algirdas Semeta says it is possible that the tax could enter into force beginning January 1, 2014.
Use of Funds
Although some press reports have said the funds will go towards bailing out European banks, there is no agreement yet on how revenues will be allocated. International campaigners who have been advocating for financial transactions taxes for several years will be redoubling their efforts to demand that revenues to go towards social and environmental purposes.
December 14, 2012 · By Sarah Anderson
Under pressure to address a massive deficit, legislators voted overwhelmingly this week in favor of a tax on financial speculation. This really happened, I swear.
OK, it was in Europe, not the United States. But it could happen here—and it should.
The vote in the European Parliament on December 10 was the latest in a series of victories by international campaigners for a tax on trades of stocks, bonds, and derivatives. Often called a “Robin Hood Tax,” the goal is to raise massive revenues for urgent needs, such as combating unemployment, global poverty, and climate change.
A financial transaction tax would also discourage the senseless high frequency trading that now dominates our financial markets. Recently, the chief economist of the Commodity Futures Trading Commission (the top U.S. derivatives regulator) found that such trading practices are hurting traditional investors.
In reaction to the Parliamentary vote, David Hillman, of the U.K. Robin Hood Tax campaign, said that the tax “will raise at least 37 billion euros per year for the countries involved whilst reining in the worst excesses of the financial sector.”
Nicolas Mombrial, a Brussels-based policy adviser for Oxfam, added that “The European Parliament’s overwhelming support reflects the will of Europe’s people. In cash-strapped times, an financial transactions tax is a no-brainer that is morally right, technically feasible, and economically sound.”
Read the rest of this article on the Yes! Magazine website.
October 12, 2012 · By Sarah Anderson
European campaigners for a financial transaction tax have done some awfully goofy things over the past three years.
At one French demonstration, they stripped down to their skivvies to emphasize the small size of the tax (0.1% on trade of stocks and bonds and 0.02% on derivatives under the European Commission's proposal). In Germany, they rented a limo and crashed the Berlinale film festival, dressed as Robin Hood characters. In many countries, they've gotten elected officials to pose with silly hats and fake bows and arrows.
But after this week, the opponents of the financial transaction tax (aka Robin Hood Tax) will no longer snicker at such antics. At a meeting of European finance ministers on October 9, 11 governments committed to implementing the tax. This is two more than the minimum number needed for an official EU agreement. And it is a huge victory for those of us -- not just in Europe but also in the United States and around the world -- who've been pushing for such taxes as a way to curb short-term speculation and generate massive revenue for job creation, global health, climate, and other pressing needs.
Of course the goofy stunts weren't the only game-changers. Campaigners have also built up strong technical arguments about the feasibility of such taxes. And a growing number of financial professionals have come out in support, blunting the industry backlash.
The broader European crisis has also been a major factor. In fact, there are rumors that Italy and Spain may have sold their support in exchange for some debt concessions from Germany. The additional eight governments in the new coalition of the willing are France, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, and Slovenia. More may join in the coming months.
There are still a few hurdles ahead. There will be a round of negotiations that could result in the European Commission's proposal being watered down by lowering the rates or narrowing the base to only cover securities. There will be a fight to make sure revenues help people and the planet instead of the big banks. And EU heads of state will have to vote by a qualified majority to give the initiative the green light. This means some countries that don't plan to implement the tax themselves will still need to sign off on it. The biggest opponent, UK Prime Minister David Cameron, may have some obstructionist tricks up his sleeve.
But according to Peter Wahl of WEED, one of the key forces behind the German campaign, "there is now quite a strong political will behind the project, so that we can expect definitive implementation rather soon, perhaps already during 2013."
Europe's dramatic step forward can only boost the growing U.S. grassroots efforts for a Robin Hood Tax. Our current Treasury Secretary, Timothy Geithner, has been a naysayer, sometimes even chastising European leaders for considering the idea. But with Geithner heading out the door after the election and Europe moving towards raising revenue off the tax, we may get a blast of fresh thinking.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.
Follow her on Twitter: www.twitter.com/Anderson_IPS
July 3, 2012 · By Salvatore Babones
The leaders of continental Europe's four biggest countries agreed at last week's euro zone summit on the principle that the European Union should move toward imposing a tax on financial transactions. Though it was hardly mentioned in the U.S. press, the agreement was big news in Europe. The leaders say they will raise funds equal to 1 percent of total euro zone gross domestic product through a financial transactions tax (FTT), though no details were forthcoming on just what would be taxed or at what rates.
That President François Hollande of France, Chancellor Angela Merkel of Germany, Prime Minister Mario Monte of Italy and Prime Minister Mariano Rajoy should all take time out from acute crisis talks to agree on any long-term policy position is remarkable. That they should agree on a new tax is more remarkable still. Nonetheless, Chancellor Merkel stated flatly that she was "pleased that all four here have committed to a financial transactions tax."
FFTs are nothing new. They used to be called "stamp duties" and all industrialized countries used to have them. Today, they survive mainly in real estate transfer taxes. Stamp duties on frequently traded financial instruments like stocks and bonds were eliminated in the twentieth century in most countries under pressure from the finance industry.
When the world went off the gold standard in 1971 and modern foreign currency markets came into existence, economist James Tobin recommended that a small transactions tax be applied to foreign exchange transactions as a way to prevent instability in these new markets. He argued that the hyper-efficiency of foreign exchange markets could lead to unwanted volatility that might harm countries' real economies and that a transactions tax would reduce these tendencies.
If Tobin was right for the foreign currency markets, he was even more right for stock markets. He couldn't anticipate in 1972 that by 2012 stocks would be traded electronically at such high speed that banks would move their computers physically closer to the exchanges so that their trading orders would be executed faster. Tobin taxes are probably more important today for damping down volatility in share markets than in currency markets.
The goal of a Tobin tax on financial transactions is not to take from the rich and give to the poor. It's to prevent the rich from destroying the economy for the rest of us. Tobin taxes are meant to slow down runaway markets, to let a little air out of inflating bubbles and in general to give people and governments just a little more time to respond to economic problems before they get out of hand. Tobin taxes give the real economy just a miniscule edge over the speculative economy. Usually, that's all that's needed to prevent the speculators from running roughshod over the rest of us.
What turns a Tobin tax into a Robin Hood tax is what you do with the money you collect. President Hollande et compagnie have made no mention of taking from the rich to give to the poor. Their plan, to the extent that they have one, seems to be to use the proceeds of a FFT to fund the European Union budget. At best, the money collected might go to the poor of Europe. There's certainly no talk of spending it on the poor of the world.
And, yet, the rich countries of the world - including the euro four and the United States - have all agreed to dedicate at least 0.7 percent of their national incomes to official development assistance (ODA) to poor countries. This foreign aid commitment has been in place in various forms since 1970, though it has been met by only a few (mainly Nordic) countries. Since the beginning of the global financial crisis, levels of ODA have actually declined for many countries.
United States ODA to poor countries is only 0.21 percent. The top three recipients are Afghanistan, Iraq and Pakistan, which hardly suggests that our aid money is independent of our foreign policy goals. France, Germany, Italy and Spain give 0.50 percent, 0.39 percent, 0.15 percent and 0.43 percent, respectively (2010 figures from the Organisation for Economic Co-operation and Development).
The numbers being mooted for the euro zone FTT are tantalizingly similar to the figures that developed countries have committed to spending on foreign aid. It is, however, highly unlikely that any money raised will be used for this purpose. A new tax imposed during an upturn might go to aid. A new tax imposed during a downturn will inevitably be spent at home.
The best solution might be a threshold split. The first 0.5 percent of gross domestic product raised by an FTT could be spent on national debt relief. Any remaining sum could then go to the aid budget. The advantage of such an arrangement would be to make the tax politically palatable now, but morally palatable later. It would also make the tax anti-cyclical: in a downturn the money raised would stay at home, while in an upturn it would go abroad. Wins all around.
But waiting in the wings is the sheriff of Nottingham. The UK's Chancellor of the Exchequer, George Osborne, staunchly opposes a European FFT that might cover British-based companies. Of course, if it doesn't include the UK, a European FTT would just drive business to London. The City of London is by far the world's largest offshore financial center, dwarfing other even shadier British territories like Bermuda, the Channel Islands, the Cayman Islands, the Isle of Man and the Turks and Caicos Islands.
To have any hope of helping the ordinary citizens of Europe and the poor people of the rest of the world, a European FTT would have to be coupled with European legislation to prohibit the trading of European financial instruments outside Europe. This is technically feasible, but it would require a higher level of commitment than European leaders have shown to date.
To be morally and politically palatable, a FFT should have a built-in threshold beyond which any funds collected would go straight to official development assistance. On the one hand, it is politically unrealistic to expect a European FTT to be devoted entirely to foreign aid. On the other hand, a narrowly targeted FTT designed only to respond to the current euro crisis might simply be repealed once the crisis passes. A well-designed FTT should serve both purposes.
Throughout this debate it must be remembered that a well-designed FTT will pay for itself. The original Tobin tax idea wasn't about feeding the poor. It was about improving economic performance by damping down the worst excesses of financial markets. Runaway markets can severely misallocate financial capital. We should all have learned that lesson in 2007, if not in 1929. If we can save the euro while improving the economy and at the same time divert part of the benefit to help the poorest people on Earth ... why not?
The sheriff might just have to accept a happy ending after all.