by Guest writer NTDSMK
When in the shops this summer, searching for new sun cream, or perhaps sun glasses, just reflect on the 20% rate of VAT you’re paying. Think how much you could buy with the money saved, if VAT hadn’t risen?
Remember those days when ordinary consumers in the high street spent extravagantly and with abandon? Those must have been the days when they were in the process of crashing the world economy? No, I do not remember that happening either.
So why is it, whether through cuts or VAT, that those ordinary consumers who did not cause this mess are the ones to suffer? Ed Miliband has spoken in favour of the squeezed middle regularly. If he really wants to help them, and the rest of society besides, then it’s time for a Robin Hood tax.
A Financial Transactions Tax, or “Robin Hood” tax, of just 0.05% on transactions that do not involve the public would, according to the Robin Hood tax campaign website, raise £250 billion globally – every year. At a time when public services are being squeezed and it is very rare to find someone who isn’t suffering, this money is badly needed.
In their Working Paper, the International Monetary Fund themselves acknowledge that this would be “highly progressive” in its “distribution”, taking a tiny portion from the very richest to fund those who need it most. The main benefits are obvious: a simply huge amount of money that would substantially soften the blow, if not completely remove the need for, cuts, and to invest in the future when the deficit is no more than a bygone problem.
Billions to invest in infrastructure, public services and young people would go an incredibly long way towards developing our country into an economic force in the 21st century. And at the same time as reducing risky speculation, you could be forgiven for thinking this a miracle idea.
The good news is that there are very few negatives to such a tax.
The inevitable scream that “the day of judgement is upon us!” will doubtlessly come from more Conservative quarters, the prophets of doom telling us that this will drive the bankers overseas, to Frankfurt or New York – somewhere free of such a tax. But remember when the bankers told us that talent “will go” if a bankers bonus tax were to be introduced by Alastair Darling?
Do you see Canary Wharf lying in abandonment now, the square mile a quiet shadow of its former self?
Why should this, something which hits banks far less be any different? At a time when the bankers have escaped relatively unscathed from the credit crunch in Britain, compared to other countries, they will consider such a tax to be getting off lightly.
A Robin Hood tax would “not automatically drive out financial activity” – again from the mouth of the IMF. Such a miniscule tax would have very little effect on a financial sector which already had to dramatically cut costs in the wake of the bailout.
For every pound you spend, twenty pence goes in VAT. All this tax suggests is that, for every pound banks spend on such transactions, they pay 0.05 pence. They pay little, we get a lot. What could be better?
More than that, there is a moral duty for a Financial Transactions Tax. Is it fair that every member of the public, no matter what their meagre savings, are forced to pay 20% VAT on everything they buy when our richest institutions have to pay absolutely nothing in a similar circumstance? Is it fair that the pensions of the public sector are being slashed as the banks continue to dish out large pay rises and bonuses to their employees? Is it fair that, despite the bailout, the banks have reasserted themselves at the head of our society with barely any penance?
As you pay 20% of your hard earned wages on basic essentials, as the cuts bite hard, as you struggle to make ends meet, ask yourself this: why aren’t the banks paying their way?
If Ed Miliband really wants to help the squeezed middle then it’s time to stand up for a tiny tax with big results.
“A Financial Transactions Tax, or “Robin Hood” tax, of just 0.05% on transactions that do not involve the public would, according to the Robin Hood tax campaign website, raise £250 billion globally – every year”
It would raise much much much more! for Asia and the long list of country’s that have stated they will not impose such a tax – In-fact they imposed such a tax in Sweden towards the end of the 1980s collecting just 5% of the projected revenues and making a loss over all due to the fall in capital gains and related income taxes. Some traded products fell by over 90% compared to there volume traded before the tax.
You may upon first impressions judge the cause of this as greed how ever when you take into consideration that a 0.05% financial transaction tax upon one thousand currency contracts held for exactly three months amounts to over one hundred and eighty MILLION in tax, requiring a 180% before profit levels are reached then you start to understand how utterly destructive to the point of impossible this tax makes it to conduct business.
The value of a transaction is not the profit made in the transaction, pension funds, insurance funds, hedge funds etc can not operate with a cost such as this so they will move, the banks how ever can pass the cost onto the customer so they will..including the mortgage costs.. interbank over night lending to balance the books currently charged at under half a percent per year, add a financial transaction tax nightly and watch the cost of borrowing go up tremendously.
The bankers wont care about the tax because the public pay, traders,funds,corporations who must exchange billions in order to conduct business..none of these caused the crisis and none of these are going to pay billions extra per year in tax despite profit or loss.