Hannah French: Robin Hood Tax can take from rich banks to help world's poor

Published on Tuesday 9 February 2010 21:13

LAST month, the UK officially moved out of recession, but the effects of the crisis are still being felt in Scotland's capital, as Edinburgh city council continues to try to amend the existing funding gap, estimated at £90 million.

There has been lots of talk recently about how to repair the damage done by the crisis.

Not surprisingly, politicians from all the major parties are talking about how to rebuild the social contract we have with the banks, and how to give them the opportunity to contribute to cleaning up the mess that they were instrumental in creating.

Today, the Edinburgh group of activists with the campaign group Results are joining with a coalition of UK development and environmental charities, trade unions and faith groups in calling for a Robin Hood Tax ( www.robinhoodtax.org.uk.), intended to help pay for this clean-up.

Our idea is simple: apply a tiny tax to bank-to-bank transactions, and so generate billions of pounds for social spending in the UK and to tackle poverty and climate change abroad.

"Tiny", in this case, means an average rate of only 0.05 per cent. "Billions" being about 250 billion a year if the Robin Hood Tax is applied worldwide.

Understandably, this idea is going to generate much opposition from those who profit most from the status quo. Opponents of the Robin Hood Tax will tell you it is technically impossible to collect taxes from complex bank transactions and the banks will find ways to avoid them.

This might have been true 20 years ago, but now clearing houses (which manage bank-to-bank transactions) are centralised and computerised and already collect far more complex fees on behalf of the banks themselves. Adding in a simple tax is technically trivial.

Opponents of the Robin Hood Tax will argue it will be passed on to bank customers. It is true banks have, in the past, raised fees and charges to pass on costs.

What's also true is that the transactions that the Robin Hood Tax will target are mostly so far removed from the day-to-day economy it would be difficult to pass the taxes directly on to the high street – in fact, the Robin Hood Tax is less likely to impact directly on consumers than most other ways of paying for the financial crisis.

Opponents of the Robin Hood Tax will also say it would make Britain uncompetitive and the City would crumble. Yet we have a stamp duty tax on share-trading at 0.5 per cent – ten times higher than the Robin Hood Tax – which has not stopped so many banks from making the UK their home.

You may ask: what will the Robin Hood Tax pay for? Ultimately, that is for us to decide.

The billions raised will help to pay for essential services, such as the NHS, and will certainly lessen the need to raise other taxes that would hit ordinary people and small businesses harder than a Robin Hood Tax ever could.

We must also remember the developing world. While uninvolved in generating the crisis, Africa alone lost 56bn in growth last year because of it.

In a recent letter to our group, Edinburgh Labour MP Mark Lazarowicz agreed with the premise for the tax, saying: "I think that a financial transactions tax could be a good way to provide finance for health services in developing countries, or assisting them to adapt their economies to climate change."

Ensuring the banks help to repair this damage is morally right. Small change taken from the banks could make a big difference to communities in Scotland and across the world. All in all, it is an idea whose time has come.

&#149 Hannah French is the Edinburgh co-ordinator of Results UK, a British charity working to combat hunger and poverty around the world