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.
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!
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!
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
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