The Robin Hood Tax – By Oliva Hawley

24 Nov
We have heard the news talk about the Robin Hood Tax…or have we?  The media may have mentioned it, but have never actually explained to the public what it is exactly.  Well, I am here to tell you all about it and the benefits from adopting this tax.
What is it?
 
Basically, the Robin Hood Tax (will be refered to as “RHT”) is a VERY tiny tax of 0.05%, to be levied against all financial transactions in order to raise resources for fighting poverty and climate change at home and abroad.  The RHT would cover financial transactions through stock exchanges, futures exchanges and any other facility established for the purpose of trading (exchange trading) by financial market actors.  If you are feeling a bit lost right now, it’s ok.  So was I when I first researched this.  Here is a short rundown of some of the financial jargon I’ve just talked about.
1. Financial Market Actors
     These can be broken down into 3 catagories.
          a)Issuers
          b)Investors
          c)Intermediaries
     The issuer is the person with the commodity to be sold, the investor is the person interested in purchasing said commodity and the intermediary is the person who facilitates the contracts between the issuer and investor.
2. Stock and Futures Exchanges.
     The Stock Exchange provide companies with the facility to raise capital for expansion through selling shares of their company to the investing public and Futures Exchange are contracts to buy a specific quantity of a commodity to be delivered at a specific time in the future.
Are you with me still?  Awesome!  Lets continue!
Who will pay?
The banks and other financial sectors.  The RTH would ensure that they would pay their fair share of the economic recovery.  It would levy transactions involving stocks, bonds, foreign exchange and derivitaves (including trade of futures and options related to the stocks, interest rate securities, currencies and commodities.)  It would be limited to financial market actors only.  Ordinary consumer transactions such as payment for good, pay cheques and cross border remittances would not be subject to the RHT.  Short term interbank lending and Central Bank operations would also be exluded.
To put that into layman’s terms…the financial sector would pay and it would take a HUGE load off the average human worker.  Sounds good to me so far!
Why?
The purpose of this tax would provide world governments with considerable revenues which could be used for fullfilling social policy goals.  Did you know that the Austrian Institute for Economic Research has estimated that a global transaction tax of 0.05% could yield around $650 BILLION a year???  And that is AFTER a drastic reduction in the market as a result of this tax!
What for?
 
The money that could be collected from this tax could be used for stimulus packages North AND South as deficits and public debts balloon and to help fill the funding shortfall for acheiving the Milenium Development Goals of the UN and supporting developing countries in their climate change adaptation efforts and their transitions to greener economies.
If you aren’t sure of what the United Nations Millenium Development Goals are, here they are.
Millenium Development Goals of the UN
     1. End hunger and poverty
     2. Universal education
     3. Gender equality
     4. Maternal health
     5. Combat HIV/AIDS
     6. Environmental sustainability
     7. Global partnership
How?
 
The money would be collected in the individual stock exchanges where trading occurs through electronic settlement systems used on all important exchanges.  Ideally, the RHT would be introduced globally, but this does not preclude contries from introducing it unilaterally.
 
Who supports the Robin Hood Tax?
 
Much of the support for the RHT is centered in Europe and other global regions, as well as with the academic community.  France, Germany, the United Kingdom, Japan, Austria, and Belgium, all support the Robin Hood Tax. The United States is warming up to it, as is Brazil. The EU parliament and European Commission have spoken out in favour of the Robin Hood Tax. Former Governor of the Reserve Bank of India, Yaga Reddy, came out in favour of the tax in March.
Now for the fun part…the Canadian Context.

Between December 1998 and March 1999, Canadians rallied in support of a Private Member’s Motion in the House of Commons, which stated, “that in the opinion of the House, the government should enact a tax on financial transactions in concert with the international community.”

As a result of widespread public support, the motion passed by a resounding margin of 164-83 on March 23, 1999. Canada became the FIRST country in the WORLD to declare its intention to work towards the adoption of a tax to control international currency speculation.

Unfortunately, the current government is showing no leadership on the issue. Stephen Harper and Jim Flaherty have both as yet rejected the idea of the tax.

Members of all three opposition parties have shown support for a tax on financial transactions.

The fact that both our “esteemed” Prime Minister and Minister of Finance have rejected this goes to show just how corporate our government is.

– 
All that we are, is a result of what we have thought.  ~Buddha
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16 Responses to “The Robin Hood Tax – By Oliva Hawley”

  1. Frank Enbeens November 27, 2011 at 11:17 pm #

    So, Greed is Bad.

    Wanting another $1000 in your pocket if you are poor is good. Wanting another $1000 in your pocket if you are wealthy is bad.

    Tell me, so wise and great OP members, tell me what is the difference.

    I guess the only difference is which group you belong to. Otherwise, there is no difference.

    • Olivia November 28, 2011 at 12:57 pm #

      No, Frank…that is not it at all. Yes, greed is bad. Being weathly and wanting to use that wealth to make things better for all is good. Why is it that out of almost 7 billion people in the world, under 1000 of them hold the majority of the worlds wealth? They hold the monopoly on our food, water, energy sources…where is the equality in that?

      • Frank Enbeens November 28, 2011 at 5:30 pm #

        I gotta say, every time I hear someone say Greed Is Bad and that they want more, the hypocracy is thick. Also, why should someone, who on their own free will and intuition, who makes a great deal of money, why should this be looked at as such a bad thing. They operate under the same set of rules as the rest of us. Maybe it just means more to them. That`s fine. Id rather be at home with my pretty girlfriend than at work. So be it. I can live with what I earn. I never went to college. I do just fine. Really, in this city, you really have to be an idiot to fail. This city really gives every opportunity and more to people who mostly dont even qualify. Try other cities out. See how much harder it is there.

        • idnami November 29, 2011 at 3:17 pm #

          Well Frank, like you, I am self-educated and I work hard at my job even when I don’t feel like going. I have always worked to get what I wanted and for the most part I have succeeded. I’m working for this movement right now. Working my ass off actually. What is it you think I expect to get out of this materially? I’m asking that question genuinely because we are often accused of wanting a handout. If you offered me 100 grand to stop working for a better world for future generations, do you think I’d take it?
          I have always worked for what I think is important. I have the skills, talents and energy to be making a lot more money than I do. It’s never been about money for me and I have rarely sacrificed what I cared about for a few extra bucks for myself.
          I will point out to you that corporate CEOs and investment bankers DO NOT play by the same rules as the rest of us. If I steal your car, I go to jail. If an investment banker steals your pension, they get a bonus.
          I DO want more. I want more love, compassion and understanding. I want a media which educates and informs rather than simply entertaining and catering to the lowest common denominator. I want a legal system that is focused on equality and justice. I want schools that teach kids to think rather than regurgitate. I want a country which grows its own food and manufactures its own products rather selling off our resources only to buy the products made from them. When I phone a customer help line I want to talk to someone in Canada, not Bangladesh. Not that I have anything against Bangladesh. I’m just saying that Canada has everything it needs to make a self sustaining abundant society for every single person living here. But we keep making foolish, shortsighted decisions which are going to leave us over extended and vulnerable. If we outsource our jobs, we will have poverty. If we don’t grow our own food, we will have inflated food prices, less quality and more pollution. Today I was shopping for groceries and saw red peppers all the way from Spain. Spain? What did it cost to get them here? For what we paid for it could we have built some greenhouses instead and grown our own? I’m telling you man, we need to rethink a LOT. The trouble is that few people are willing to endure the temporary discomfort of transition. The occupiers are.

    • idnami November 28, 2011 at 1:32 pm #

      Thanks for asking. The difference in my mind is need vs want. If you have nothing then $1000 means a LOT. If you have millions what’s another grand? Especially if YOU getting it means taking food from the mouths of hungry children?
      If you can see past your prejudice for a moment you will see the difference. If you want to MAKE a difference, ALL are invited here: http://www.facebook.com/groups/135178616591524/

  2. anon November 25, 2011 at 2:47 pm #

    So let me get this straight….you want to make it harder for people to accumulate wealth and make it easier for them to become dependent on the state for things like welfare? All while keeping those 1% at the top?

    Wow….just wow….

    I’m 32 years old. My stock portfolio is less than $30K. I have that money because I have been saving 10% of my income for many years now. I trade in stock in order to make more money, with the end goal to have enough money in interest payments that I can work at the jobs I want to work at, and not the jobs I have to work at. My account grows little bit by little bit. You want to take more money away from me? At my current stage, even 0.05% hurts. Big time. Every time you add a fee, or a tax, or a charge, that my broker has to pass onto me, I lose. My broker isn’t going to eat those costs. They get passed onto me. I’m looking at this plan and all I see is 12 years of savings getting taken away because every time I make a deposit, you are taking more money.

    Maybe you don’t realize this, but when you get to a certain level, you can stop trading so much. You can live off the interest payments.

    I can’t. I have to see the stocks and buy cheaper ones in order to create my wealth. I have to trade more to get more. I have to put money into the account and purchase stocks on a fairly consistent basis or the growth slows. And this RHT hurts me. Hurts those who are working hard and trying to save every penny they can.

    At the end of the day, it’s not the “financial sector” that pays. It’s me. It’s you. Guess where the CPP keeps a lot of their money? In that big bad boogeyman the “financial sector”. Guess where that 0.05% will get made up from? Yours and my taxes.

    Guess where every pension plan keeps their money? that’s right, in the financial sector. Guess who pays into pensions? People like you and me. And here is how it hurts you.

    Lets say you have $1000. You plan on retiring in 30 years, so you take that $1000 and you invest it in an RRSP/Pension plan. Lets say you make 5% on that money. That gives you $4321.94 in 30 years, right? Actually, under the RHT you only have $995 to invest. That means you have $4300.33 for retirement. A difference of $21.61. You’re retired, so you start withdrawing $50/month. To get the $50/month though, with the RHT, you have to now withdraw $50.25 in order to get your $50. Now you are losing $3/year to this RHT.

    Am I the only one who thinks this is a really bad idea?

    • Anonymous November 25, 2011 at 2:55 pm #

      I couldn’t agree with you more!

    • Olivia November 25, 2011 at 4:13 pm #

      @anon, Not so fast and Anonymous.

      Thank you for bringing up these points. As it sits, I have no answers. I have thought about the RHT and have talked at length with some of the occupiers and other protesters, as well as the general public and quite a few of them have voiced similar concerns and opinions.

      In theory, it really could work, but I can also see the other side of that coin. Not so fast and anon, you bring up very valid points about the buck still being handed down to us. I could see the banking and corporate systems doing just that in order to make back all that money that they would have had to pay out.

      My question is Why? When their profits range from the hundred millions into the billions, is it really neccessary to try and recoupe the amount of money that would equate to a drop in the pan for them? One of the main reasons we are in the recession that we are is because of corporate greed. Profit has become the surpreme religion and the “almighty dollar” our god.

      I would love to see a world where people don’t have to work 3 jobs to survive. Some fair distribution of the wealth (considering that the banks hold most of the worlds wealth) would be nice. Not to mention having a maximum wage, instead of a minimum wage. Demographics have shown that if you are making $12.50/hour, you are living below poverty. So why does Alberta, the richest province in Canada, have a minimum wage of only $9.40/hour? In this case, the average person in Alberta would have to work two full time jobs and maybe even two part time jobs just to get anywhere. For someone in my situation, one full time job would pay for someone else to look after my child between the hours of 6am and 6pm.

      Sorry about getting off topic guys. Please, continue this dialogue. I am enjoying the information I am getting and being able to give what info I have.

      Olivia

      • anon November 25, 2011 at 6:59 pm #

        Why wouldn’t they try to recoup the extra costs? Why wouldn’t they just eat the cost? Really?

        Under the law, corporate officers are required to work in the best interests of the corporation, even if it’s against their own interests. As a shareholder, I love that idea. I love knowing that should a corporate officer do actions that are in their interests and not in the corporate interests, I have the ability (assuming I can prove it) to sue the officers individually for lost investment income. What you are advocating is that they work against the interests of the corporation.

        You want to kill corporate profits? Don’t use large brokers. Support the small guys.

        You want to kill corporate profilts? Put in a maximum wage. Sorry, but human psycology. Why would you keep trying to work harder and better, push yourself to make your life and your families life when you’re already making the most you will ever make?

        As for your point about why are we in the recession we’re in? I don’t blame corporate greed. I blame idiots that don’t know how to live within their means. Idiots that got mortgages they couldn’t afford. Idiots that leverage themselves to such an extent that they couldn’t pay their debts. I’ve had offers to take on a larger mortgage. I turned it down. I knew what I couldn’t afford.

        And as for the working 2 or 3 jobs? Here’s the deal. When I decided to go to post secondary, I took a look at not what I really wanted to, but what would pay the bills when I graduated. I like my job, I have fun at work, but I didn’t choose this career for fun. I chose it for profit. If you want to work in Alberta, you have to work within the economy that’s here. You don’t try to become a movie director here, you move to Vancouver. A philosopy degree? Sounds like fun, but it don’t pay the bills. Phd’s that work at starbucks? They made the wong decision.

  3. Not so fast November 25, 2011 at 12:51 pm #

    It will not slow down the economy. However it will get passed onto the consumer.

    Example: I am a broker all of a sudden my Bank (TD) charges me a 0.005% fee when investing my clients money. So at the end of the year I go to my client and say “Client” it’s been a great year but I paid $500 in fees this year moving your money around. So next year instead of my fee being $5,000 it is $5,500.” My client says OK no problem, they then go to their business they own and maybe it is a restaurant and they say “we need to make up that money…. OK spring rolls were $4.00 each, now they need to be $5.00 each.”
    Each time you add a fee to a user especially a bank that fee gets passed down the line. Someone has to pay for this fee.

    • Anonymous November 25, 2011 at 1:40 pm #

      So at the end of the day, the user pays. Isn’t that the argument? You want the corporations to pay.

  4. Olivia November 25, 2011 at 12:36 am #

    @Anonymous

    That is definitely a valid concern. It was actually brought up to the EU by Boris Johnson, the Mayor of London back near the end of October. He had written to European Commission President, José Manuel Barroso, warning him that adopting this tax could run the economy into the ground by driving financial centers outside of the union. This was followed by a speech made by David Cameron about the fallicy of adopting this tax. His speech is as follows…

    “London is the centre of financial services in Europe. It’s under constant attack through Brussels directives. It’s an area of concern, it’s a key national interest that we need to defend.”

    Mr Cameron pledged to fight to prevent further integration of the eurozone countries leading to anti-competitive regulations.

    “As the 27 we need to make sure that the single market is adequately looked after.”

    “There are a lot of things the eurozone is doing together,” said the PM. “Having more meetings alone, establishing machinery – it raises the question of could there be caucusing?”

    Now, if this tax could be implemented globally, there would be no need for warnings of collapsing economies because EVERYONE would be involved.

    The question remains though…how to get everyone on board with this?

    • Anonymous November 25, 2011 at 8:48 am #

      If this tax was brought in, it would be passed on to the consumer (investor) at the end of the day. That doesn’t help anyone.

      Never mind the fact that you would never get all of the countries to buy into this tax in the first place. Countries are scared to do anything to their economies right now in fear of them collapsing.

      The system isn’t broken, it just needs to be tweaked.

  5. Jan Bacon November 24, 2011 at 3:54 pm #

    Woohoo – Love you Olivia, thanks for making it so clear. (hugs)

    • Olivia November 24, 2011 at 4:32 pm #

      No problem Jan! I know Chelsea has been really busy, so she hasn’t posted the talk I gave back at the beginning of November…or was it the end of October…I can’t remember. So I decided to put it on the blog.

      Thanks to Mandi for getting it up as quick as she did! That was awesome!

      • Anonymous November 24, 2011 at 7:07 pm #

        Is there not a concern that this will slow down the economy and financial trading because of the tax?

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