Sachs calls for Robin Hood tax on 'smirking' Wall Street | Business | guardian.co.uk .

A tax on every deal conducted by the financial industry would curb the excessive power of Wall Street, avoid the need for swingeing cuts in public spending and pay for the west's unfulfilled promises to poor countries, one of the world's leading economists saidtoday.

Jeffrey Sachs, economics professor at Columbia University in New York, told a London audience that the so-called Robin Hood tax was a means of exercising control over bankers and ensuring they paid the right amount of tax.

"Wall Street has had the most profitable year in its history. It made profits of $55bn (£37bn) in the midst of the biggest downturn since the Great Depression," Sachs said, adding that the profits had only been possible because of taxpayer bailouts and the zero interest-rate policy pursued by the Federal Reserve, the US central bank. "Bankers are brazenly smirking as they pocket large amounts of our money."

A tax on all financial transactions is one of the options being considered by the leaders of the G20 developed and developing nations in the wake of the financial crisis of the past two-and-a-half years. Barack Obama has expressed support for a levy on banks that would pay for any future bailouts, but France and Germany favour a transaction tax.

With the International Monetary Fund due to produce a report to the G20 next month, Sachs said that a Robin Hood tax levied at 0.05% on every transaction would help countries repair the damage to their public finances caused by the recession. "We need the money," he said ."The financial sector is under-taxed. It is out of control."

Tim Geithner, the US treasury secretary, is deeply sceptical about a transaction tax but Sachs said Europe should try to shame the US into action. "Europe can and should lean on my country and say 'you get on the case too'."

He's right.

The IMF need to note the arguments here.

It's not clear they have.