1,000 economists (with me included in that number) have written to the G20 and Bill Gates to call for a financial transaction tax.
We said:
Dear G20 Finance Ministers and Bill Gates,
We write to you as the call for a Financial Transaction Tax is now gathering global momentum, and the French government has made it a key priority for their G20 presidency.
This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.
Even at very low rates of 0.05% or less, this tax could raise hundreds of billions of dollars annually and calm excessive speculation. The UK already levies a tax on share transactions of 0.5%, or ten times this rate, without unduly impacting on the competitiveness of the City of London.
This money is urgently needed to raise revenue for global and domestic public goods such as health, education and water, and to tackle the challenge of climate change.
Given the automation of payments, this tax is technically feasible. It is morally right.
We call on you to implement the FTT as a matter of urgency.
Yours.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Where is the full list of signatories?
Sven
Sven
http://www.guardian.co.uk/business/interactive/2011/apr/13/robin-hood-tax-economists
Best
Richard
Good length. Well done. Is Gates on board?
What addressed to Bill Gates.
Sweden tried a FTT in the 80s and it failed appallingly:
“revenues … were initially expected to amount to 1,500 million Swedish kroner per year. They did not amount to more than 80 million Swedish kroner in any year and the average was closer to 50 million.”
From http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp419-e.htm
Even if all of the G20 signed up, all it takes is for one country outside the G20 to NOT implement a FTT and then much of the world’s finance trade will migrate there. Singapore isn’t in the G20. Neither is Spain. Do you think they’ll pass up the chance to boost revenues from encouraging financial firms to move to them?
Andrew
the cases cannot be compared
a) Markets have changed massively
b) There are many fewer currencies traded now
c) The technology to capture data through central clearing systems exists now
d) That makes it irrelevant whether Singapore etc are in – the FTT can be imposed on the origin of deals, not where settled
e) Financial markets are not mobile due to tome zones and clustering – but Sweden was never a finance centre
Sorry – your example just does not work and nor do your assertions
Andrew, Richard:
Forget about Spain or Singapore. The United States (40% of the world economy, 85% of all al foreign exchange transactions) has no interest. Geithner and the Obama administration oppose it. I’ll let you imagine the Republicans’ view.
That in itself is terminal, but add the fact that China, the world’s largest holder of foreign exchange reserves, does not support it either.
And even if the EU wanted to do it alone, this would require the unanimous support of all member states, and practically that of other nations in the currency zone (Switzerland). This will not happen.
D
True about the US. So what? They don’t have VAT either. It still works.
And we can still charge all transactions in sterling and the Euro and all originating and or settled in Europe.
So you’re just wrong
You can say it won’t work forever, but the fact is it can
Richard,
It is interesting thet you bring the example of VAT. If the EU were to introduce an FTT unilaterally, the immediate effect is that all wholesale financial activities would be diverted to Dollars (where most of the volume is anyway). This would almost overnight end the role of the Euro as a major reserve currency (Sterling has long ceased to be one), with immediate impact on borrowing and other financing costs for European public and private entities.
The only financial activities that would not re-denominate would be in the retail area. So, just like with VAT , it would be consumers that would be hit by the tax.
This is all just theory anyway. When is the last time that all EU member states agreed to a controversial tax arrangement?
You really are a fantasist – the Euro and Sterling are reserve currencies because vast numbers of people use them to trade because they’re a means of settlement for which the dollar cannot be used because it is not legal tender for settlement of much debt
The reason for the vast numbers of trades in foreign currency is that the differences between them can be arbitraged
Try arbitraging the dollar v the dollar
You really spectacularly don’t understand
Richard,
I am not a fantasist and I understand very well the issues.
The situation you describe with respect to Sterling is no different to that with Sweden’s Krona in the 1990’s; some domestic consumers will have no choice but to trade in Sterling, but many others, including those involved with imports/exports and mobile resources like capital, will.
In fact, this may be a very regressive tax (assuming it raises any money) since the holders of capital and wealth will find it very easy to avoid it by simply moving their assets into Dollars.
I have made my points and you have not answered them
Candidly I don’t think you understand the nature of the market an FTT will tax
Richard,
Having spent the last 18 years working on average 6 days and 50 hours a week in global markets, from New York, Sao Paolo and London, I believe that I understand at least as well as you the nature of global capital markets.
Your points are either weak, contradictory, or irrelevant.
And in any event, none of this will ver see the light of day: the US and China are against it, and there will never be consensus and unanimity among the 27 EU member states to introduce this tax.
Now back to the day job.
D
You rather make my case
Anyone mad enough to do what you describe does not understand economic realities
You have been utterly divorced from them – but believe your view is the one that counts none the less
You’re not an economist
OK
In that case the #1 economics blog in the UK is not written by an economist
It’s true that I have an accountancy qualification
Does that invalidate my qualification in economics?
Or have you something else to add?
OUCH! Well it is a bit relevant Richard when you title the letter “1000 economists…”
Okay, I”m sure we can find 1000 business owners that oppose your proposal. 1000 bankers. Heck I’m sure the right wing can find 1000 health care workers, etc.
So that is a bit relevant.
Richard – the objections posted on this blog by Darren are 2-fold and you still haven’t really addressed them:
1. The Proposal won’t ever get the support of the US and China and won’t be enacted. Your response is ‘so what? we can still push for it’! The answer to that is – okay, you’re optimistic, but seriously…it won’t get accepted. I’d like to lobby for all sorts of things that won’t work, but…why? IT won’t influence anyone. The US point is relevant, having spent lots of time there, the Democrats won’t want to be seen as taxing the super rich, and the Republicans will need to be rendered to Morroccon jails with electricity on their testicles to agree to this. So in short: IT WON’T HAPPEN IN AMERICA, so why lobby for this pipe dream??
2. How are the Singapore and Spain examples not relevant? Say your lobbying works and the UK enacts your plans, then how does Spain, Switzerland, the next opportunist nation stepping into the fold not benefit and the UK get weaker as a result?
And as I say time and again – China and the SA don’t need to approve it
It can be done at a UK, EU or other level at choice
The mechanisms to collect exist
And since the EU is interested the tax base is amply big enough to justify it
Your objections are pure rhetoric – not fact
Whether it happens in the US or not does not matter
You’re not an economist
Is that an insult or praise?
I’d like to add a third and fourth objection to the mix:
3. Venezuela is going ahead with this plan this year. Why don’t we watch what their elite do in the next 6 months before passing judgment on this plan? As I’m sure you know full well, the capital controls put on the rich in Venezuela hurt not the super rich, but the SME’s more. The really wealthy have created their own currency black markets with one foot in Miami, and just pass the buck on to their consumers/customers/middlemen… How is this not going to happen here?
4. I don’t understand the UK Left’s fascination with trying to extract profit from the city to pay for public services. Why not just cut down on foreign war spending? As in eliminate it entirely? how much would that raise??? Plus that’s an achievable target both on the left and on the right. The left want peace. The right want to stop losing young men in battle defending dark skinned foreigners that don’t love the UK anyway. Why not aim for something more achievable instead of a fantasy of shaving a 1/2 pence per transaction?
a) Of course I’d cut Trident and would not be in Libya or Afghanistan if I had my choice
b) Brazil is making this work
c) Venezuela has always had that problem – nothing new – and needs support to stop it – support I campaign for
d) The left can hold more than one objective in their head at a time