http://www.ft.com/cms/s/0/ab850536-1818-11df-91d2-00144feab49a.html
âRobin Hood taxâ seen as stealth levy
By Vanessa Houlder and Chris Giles
A celebrity-backed campaign for a âRobin Hood taxâ on banking transactions has been condemned for promoting a âstealth taxâ that would hit unintended targets while leaving the banks unscathed.
The criticism by Mike Devereux, director of the Centre for Business Taxation at Oxford University, comes at a time when proponents of the idea claim there is âa growing movementâ to introduce a financial transaction tax in the US and elsewhere.
A coalition of charities, aid agencies, green groups, church groups and unions launched a campaign this week for a âtinyâ tax of just 50p on every £1,000 of speculative transactions that could raise as much as £250bn a year internationally to fight poverty, reduce deficits and tackle climate change.
Its call for all political parties to support the idea of taking from wealthy banks to help the poor was backed by a three-minute film, directed by Richard Curtis and starring Bill Nighy as a cynical City banker sitting in a Canary Wharf office who eventually concedes that the idea has merits.
Publicity over the launch was sustained by claims of vote-rigging in an internet poll that involved one of Goldman Sachsâ computers.
Public support and opinion polls showed that the tax might actually be âa unique thing â a popular taxâ, the coalition said. It added that its campaign is backed by âfinanciers and hundreds of economistsâ, citing influential figures such as Lord Turner of the Financial Services Authority who have spoken out in favour of transaction taxes.
Proponents argue that much of the tax would be paid out of banksâ profits or be passed on to employees. But Mr Devereux said banks would pass on a global tax to their customers. It would be a stealth tax because no one would know who was actually worse off as a result of it, he said.
âProbably the only thing we could be sure about is that it is not the banks.â
Other concerns include the risk of damaging the liquidity and depth of financial markets and opening up avoidance opportunities.
Ian Young, of the Institute of Chartered Accountants in England and Wales, said: âThe worry is it would send the market makers off established markets down alleys and into back streets where the tax wonât apply.â
The international political momentum behind a global financial transactions tax has risen over the past year but remains extremely low, commentators said.
Although the campaigners place great hopes on the International Monetary Fund report on the subject of financial sector taxation, due in April, Dominique Strauss-Kahn, managing director of the Fund, has already made it clear that he sees no future in such an idea.
Speaking to the Financial Times from the World Economic Forum in Davos last month, he challenged leaders who called for such levies to raise taxes domestically.
âIf you donât have the political will to do it [at home], forget about it. If you have the political will, just do it,â he said.
That does not mean the banking sector will escape additional taxation.
But the levies under consideration are designed explicitly to offset the implicit support banks receive from taxpayers.
The decision in principle that could be taken by the group of 20 world leaders at its summit in June is bound up with global discussions on banking regulations.
Experts predict that the outcome, if there is one, is almost certain to look more like national deposit insurance than a Robin Hood tax on global banking activities.
âRobin Hood taxâ seen as stealth levy
By Vanessa Houlder and Chris Giles
A celebrity-backed campaign for a âRobin Hood taxâ on banking transactions has been condemned for promoting a âstealth taxâ that would hit unintended targets while leaving the banks unscathed.
The criticism by Mike Devereux, director of the Centre for Business Taxation at Oxford University, comes at a time when proponents of the idea claim there is âa growing movementâ to introduce a financial transaction tax in the US and elsewhere.
A coalition of charities, aid agencies, green groups, church groups and unions launched a campaign this week for a âtinyâ tax of just 50p on every £1,000 of speculative transactions that could raise as much as £250bn a year internationally to fight poverty, reduce deficits and tackle climate change.
Its call for all political parties to support the idea of taking from wealthy banks to help the poor was backed by a three-minute film, directed by Richard Curtis and starring Bill Nighy as a cynical City banker sitting in a Canary Wharf office who eventually concedes that the idea has merits.
Publicity over the launch was sustained by claims of vote-rigging in an internet poll that involved one of Goldman Sachsâ computers.
Public support and opinion polls showed that the tax might actually be âa unique thing â a popular taxâ, the coalition said. It added that its campaign is backed by âfinanciers and hundreds of economistsâ, citing influential figures such as Lord Turner of the Financial Services Authority who have spoken out in favour of transaction taxes.
Proponents argue that much of the tax would be paid out of banksâ profits or be passed on to employees. But Mr Devereux said banks would pass on a global tax to their customers. It would be a stealth tax because no one would know who was actually worse off as a result of it, he said.
âProbably the only thing we could be sure about is that it is not the banks.â
Other concerns include the risk of damaging the liquidity and depth of financial markets and opening up avoidance opportunities.
Ian Young, of the Institute of Chartered Accountants in England and Wales, said: âThe worry is it would send the market makers off established markets down alleys and into back streets where the tax wonât apply.â
The international political momentum behind a global financial transactions tax has risen over the past year but remains extremely low, commentators said.
Although the campaigners place great hopes on the International Monetary Fund report on the subject of financial sector taxation, due in April, Dominique Strauss-Kahn, managing director of the Fund, has already made it clear that he sees no future in such an idea.
Speaking to the Financial Times from the World Economic Forum in Davos last month, he challenged leaders who called for such levies to raise taxes domestically.
âIf you donât have the political will to do it [at home], forget about it. If you have the political will, just do it,â he said.
That does not mean the banking sector will escape additional taxation.
But the levies under consideration are designed explicitly to offset the implicit support banks receive from taxpayers.
The decision in principle that could be taken by the group of 20 world leaders at its summit in June is bound up with global discussions on banking regulations.
Experts predict that the outcome, if there is one, is almost certain to look more like national deposit insurance than a Robin Hood tax on global banking activities.
Yes, we do believe in 90% of the turkeys voting for Christmas! 