Transaction tax » Tax Research UK

For heaven’s sake Alistair – what did you expect?

Banking, Tax avoidance, Transaction tax 2 Responses »

Sep 022010

Alistair Darling says, according to the FT, of his banker’s bonus tax:

“I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and . . . will find all sorts of imaginative ways of avoiding it in the future,” Mr Darling said at a financial services conference sponsored by Nomura, the Japanese investment bank.

Well, that’s a staggering insight. And I am sorely tempted to say “I told you so”.

There were always vastly better ways to tax banks to change behaviour. A one off levy was never going to be one.

It succeeded in raising revenue – which was good – but it was never going to achieve more.

Now let’s move on and tackle the agenda I set out in Taxing Banks. That will tackle the problem for the benefit of us all. We could start with a financial transaction tax‚Ä¶..

We didn’t need this bank tax

Banking, Budget, Transaction tax 5 Responses »

Jun 222010

So we have a new bank levy – to be charged on bank assets.

The consequence is obvious: banks want lend. That’s the last thing we wanted. What we actually wanted was a tax on those transactions banks undertake that fuel bonuses and harm the economy, international relations and the stability of democracy itself. Those are the massively speculative transactions which brought banks down – and which continue unabated.

A financial transaction tax – a Robin Hood Tax – could have done that.

This bank levy won’t.

So it’s the wrong tax at the wrong time with the absolutely guaranteed wrong outcome. Apart from that, full marks to George Osborne.

Time for a Robin Hood Tax

Transaction tax 1 Response »

Mar 202010

The Robin Hood Tax Campaign has published its Budget Submission to HM Treasury. Readers of this blog might recognise the writing style.

The submission says:

The Budget debate provides the opportunity for all political parties to show their support for the Robin Hood Tax, not just on an ideal international level but starting here and now in the UK with a unilateral sterling CTT.

Without new sources of government revenue, cuts will hit vital public services, poverty relief, prevent the world fulfilling the Millennium Development Goals and reduce funding available to tackle climate change.

The Robin Hood Tax can also be part of the policy response to the economic crisis by helping reduce irresponsible banking and putting pressure on bank bonus pay – outs. Unlike other proposals for tax increases such as a rise in VAT, the Robin Hood Tax is progressive and falls on those who not only can afford to pay it, but bear a large share of the responsibility for the downturn.

Robin Hood Taxes can deliver on these issues. Now is the time to commit the UK to such taxes.

As the submission also says:

We are quite realistic: Robin Hood Taxes won’t solve all the world’s problems by themselves. They can’t.

Of course that is true, but it does not undermine the argument that we need action now to tackle the problems we face – and new taxes on irresponsible banking are part of that solution.

It will be interesting to see if any commitment is made.

Prove City trading is of benefit or shut up

Transaction tax 11 Responses »

Mar 192010

The right wing libertarian Lib Dem economist Giles Wilkes has responded to a blog here.

I’ll try to ignore the patronising bits and try to find arguments, such as:

I am utterly convinced that the 50bps stamp duty in the UK (a) falls on pensioners and (b) increases cost of capital for companies, for example. Abolishing it would improve welfare, and not introduce dangerous destabilizing speculation.

Only in saying that he depends upon an Institute for Fiscal Studies report that assumed that the efficient market hypothesis was valid – a somewhat big leap of faith these days – but to which he obviously subscribes.

And then I can’t ignore the patronising bits. He says:

So the point should be to move the debate over to where it is conducted along grown-up evidence based lines, as I think Lord Turner is capable of. Not everyone involved in this debate is so capable. So instead of:

“How much shall we take from Evil People to do Good Things, given that there are No Bad Consequences and that the people who disagree with me are clearly evil and corrupt or stupid?”

we move to:

“Transaction taxes can raise money and lower liquidity. At what level could they be set so that the liquidity lost is not harmful or if harmful is made up for by the money raised?”

Much more boring. Not sure it will attract the quantity of luvvies that the Robin Hood Tax campaign has

I’ve offered evidence based thinking. He’s ignored it – as if by pretending the counter argument does not exist he’ll win. But having used this ruse and abuse to further his cause as to the social worth of socially useless activity in the City (Lord Turner’s words – not mine) he goes on to say:

Incidentally it would also help if some of the people in the debate recognised that Corporations are not People. The tax on Corporates then fall on employees, shareholders, and so on. Read Tim’s post on this.

Intriguing that the unholy alliance between the Lib Dems and the far right marches ever onward, but he also ignores the fact that I have engaged extensively with Tim Worstall on this issue – using a degree of respect in that exchange which appears beyond Giles’ capability. But in doing so both Worstall and Giles did, again, miss the elephant in the room – and again, I am sure, quite deliberately so. I summarise that elephant in a comment on Giles’ blog where I say:

But let’s get to the real nub – since you clearly can’t / won’t address the issues on liquidity – and deal with incidence

As you know I have discussed this at length with Tim and he could not disprove the arguments I presented – indeed – he agreed they were logical is my assumptions held – he just disagreed with the logic

So why don’t you address incidence instead and answer these questions:

a) On whom does the incidence of churning costs fall in pension funds?

b) Does stamp duty reduce churning?

c) If so is stamp duty beneficial in welfare terms assuming your answer to (a) is pensioners?

Then answer the same question on where the incidence of the costs of City trading in forex, derivatives, etc fall and then suggest why that incidence is beneficial

Then follow through and suggest why reducing the incidence of those charges would harm society

Arguing about the incidence of the tax – as you on the right like to do (sorry, but true – that’s an accurate description of your position on this) is a mere side show

Address the issue of the incidence of the charges the tax is designed to reduce – that’s the elephant in the room

If you can do that then there is a grown up debate – but right now you’re wanting to squabble in the wings

It’s not you as a result whose got the high ground – you’ve not even entered the arena of discussion until you do this

For right wingers to use the incidence argument as proof that financial transaction taxes are harmful is absurd whilst they refuse to consider who bears the cost of supporting the City and its economically useless activities (again, not my words, that’s Lord Turner again). This tax is designed to reduce the incidence of the charges for useless activity – which will always be several times greater than the incidence of any tax.

If that incidence of useless charging to pension funds and others is reduced the benefit to society is high – and the fact that the incidence of the tax appears to be on pensioners is irrelevant – they will be better off from reduced charges for management of their funds.

This is the basis of the claim we ‚Äòluvvies’ make.

Now it’s time for the ‚Äònasties’ to justify why they are demanding continuing opportunity to abuse al the rest of us.

So I want reasoned answers to questions from Giles Wilkes on the real incidence issue – about why we should support City abuse from excessive trading.

I’m not expecting to get them. There’s good reason: Lord Turner is right. But no doubt Giles can try.

‘Robin Hood tax’ will hit 10,000 City bankers with £1m bonuses

Transaction tax Comments Off

Feb 132010

10,000 City bankers hit £1m jackpot: Grotesque payouts are set to double | Mail Online.

Want to know where part of the incidence of the Robin Hood Tax will fall? The Mail notes:

Up to 10,000 City bankers are in line for pay packages of more than £1million, thanks to super-size bonuses, experts said yesterday.

Detailed forecasts being used by major banks suggest that a quarter of their investment bankers will be rewarded with £1million average pay packages, senior City sources have told the Daily Mail.

That’s where a large part should fall.

Now’s the time for a Tobin tax

Transaction tax 1 Response »

Dec 122009

Now’s the time for a Tobin tax | George Irvin | Comment is free | guardian.co.uk .

One of my co-authors reiterates the case for a Tobin tax in the UK.

There’s one very good reason for it: it’s progressive whereas VAT is regressive.

Second, without a shadow of a doubt it can work.

Its time has come.

The Treasury: the case for a transaction tax

Economics, Transaction tax 3 Responses »

Dec 102009

The Treasury has published its review on the need for a Financial Transaction Tax. This is my take on the forty page document.

The Treasury: time for a transaction tax?

Transaction tax Comments Off

Dec 102009

Risk, reward and responsibility: the financial sector and society – HM Treasury .

On 10 December 2009 the Treasury published a discussion document on possible international options to reduce the cost to taxpayers of financial sector failures. Risk, reward and responsibility: the financial sector and society is a contribution to the international debate on the future of the global financial sector.

The document highlights the importance of the financial sector to the UK economy alongside the risks it poses to society. Whilst some risk-taking is inherent in financial sector operations, the recent financial crisis has shown the high cost to taxpayers when risk-taking becomes excessive. The document considers ways in which the financial sector might contribute to the potential costs of any residual risks it poses to taxpayers and to broader social objectives.

Comment later.