Don't let a backlash knock out Tobin tax | John Hilary | Comment is free | guardian.co.uk .
Gordon Brown's statement of support for a tax on global financial transactions is a welcome call on the banks to repay their debt to society. It is also a victory for the international Tobin tax movement, which has laboured hard for this moment over many years. Our task now is to fight the political backlash which is already mounting, and to defend the idea of financial transaction taxes as a means to the progressive redistribution of economic gains.
Good summary of how we got where we are and why we need to keep going forward.
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Whatever anyone’s views may be on the Tobin tax, surely the fact that the good ‘ol US of A have dismissed it is a significant indicator as to whether or not the Tobin tax is likely to be implemented?
I seem to remember reading recently that the USA want to introduce tighter anti-money laundering legislation but are facing a backlash from lawyers who want to continue to provide secrecy for clients etc. Wyoming, Nevada and Delaware are three states that are major abusers in this respect. In fact, didn’t a renowned US professor say that legislation existed in most US states that gave them the opportunity to abuse the system.
When is the USA going to be brought to heal about their own tax and secrecy abuses? What is the Tax Justice Network et al doing in this respect and what sort of publicity are these activities getting in the USA?
The idea of this tax seems interesting. However, I do have a few questions:
1. What sort of transactions is it proposed to apply to? Is there a chance that the ordinary consumer of financial products like pensions, bank accounts, and investments will end up paying for this?
2. Would the country in which a financial instrument is registered keep the tax, or would it be shared with the country in which the purchaser is resident?
3. As the UK and US have the largest international stock markets, is there a danger that this tax would be of most benefit to the two countries who are the most to blame for the global financial crisis?
4. How does this tax benefit the third world?
So in a world where Barclays makes £1bn profit per quarter in the good years, there are people in government who think they can extract £45bn a year in Tobin tax? It would be cheaper for the banks to hand back all the capital to their shareholders and go home. Or rather to set up shop offshore and operate outside the sterling area.
Barclays is going to make £11 bn this year
After £9 bn of bad debt charges
It’s one bank
Now what was your point?
John
I find this quite astonishing as a comment
Have you completely missed the fact we named the US the worst secrecy jurisdiction in the world in the Financial Secrecy Index?
See http://www.FinancialSecrecyIndex.com
No one has ever done more than us on this issue, we can fairly claim
Richard
Freeborn Man
1) Currency trading
2) No
3) Revenue is pooled
4) tax is for international development
Richard
Tosh.
http://group.barclays.com/cs/Satellite?blobcol=urldata&blobheader=application/pdf&blobheadername1=Content-Disposition&blobheadername2=MDT-Type&blobheadervalue1=inline;+filename%3DInterim-Management-Statement.pdf&blobheadervalue2=abinary;+charset%3DUTF-8&blobkey=id&blobtable=MungoBlobs&blobwhere=1231862715367&ssbinary=true
Barclays has made £2.7 bn in the first 9 months of this year, which works out at £0.9 billion. Its on page one at “Profit attributable to equity holders of the parent”. You can’t miss it.
There are always bad debt charges in banks accounts, usually about the same as the banks net profits. This years Barclays figures are flattered by repurchases of their own debt at substantial discounts, which in the case of Barclays amount to several billion of extraordinary gains.
Of course sterling is only one of the several currencies used by banks like Barclays, so that if we assume a similar tax on Euro and dollar transactions, you are talking about figures way higher than their profitability.
Alex
Barclays are allowing the press to quote £11 billion year end pfrofit after bad debt of £9 bn
There’s good reason for that, I am sure
And they are just one of many, many banks
So let’s deal with reality, shall we?
Richard
Here is some more reality: Press reports of £1 billion quarterly profits, no mention of £11 billion anything and a warning from the Barclays FD that their credit losses have not peaked yet.
http://www.marketwatch.com/story/barclays-profit-declines-as-bank-resumes-dividends-2009-11-10
The reality is that none of the UK banks, even HSBC, are likely to earn as much as 10 billion even in a good year, even in dollars let alone pounds.
http://www.dailymail.co.uk/money/article-1226024/Profits-Barclays-hit-record-11bn.html
So why the story Alex?
You missed out this bit:
“But full-year profits will also be boosted by the sale of fund manager Barclays Global Investors to US finance house BlackRock, which was approved by shareholders in August and which is expected to reap a windfall profit of about £5 billion.”
Take out the extraordinary gain, which hasn’t actually happened and you are looking at a much lower set of annual profits. And if Barclays realise that much from the sale of BGI you have to assume that the sale of a profitable business will reduce earnings in later years, which makes the case for those numbers look much weaker.
The time has come for a Tobin tax, particularly as we are faced simultaneously with a fiscal crisis, a further asset bubble and a ‘second dip’ in the US and UK markets. There are two qualifications I would make though:
1. although we do know the size of the London currency market (about $3tr per annum) and that 80% of it is speculative, we don’t know exacly what level of tax (0.1% as Tobin first suggested or 0.025% as he later suggested) would effectively control speculation. Conclusion: make the tax variable—what used to be called a ‘regulator’.
2. Let’s be clear that the tax is meant, first and foremost, as a huge revenue raising levy on the financial sector with which to finance socially beneficial activites (starting with a green new deal). As Willem Buiter argues, halting ‘socially useless’ speculative activity will require other tax measures too.
GWI: the main purpose of the Tobin Tax is to ‘throw sand in the works’ not to raise revenue.