All share transactions should be taxed, not just the little people’s
The TUC wants a budget for growth because the main way to deal with the budget deficit is to get the economy growing again. But budgets are also about taxes, and who pays them, so the TUC is also calling for tax reform. One key demand is to implement a Robin Hood Tax on financial transactions, not least because the finance sector is undertaxed compared with other sectors and, for that matter, you and me! It could raise an extra £20bn a year for good causes including preventing public service cuts, but it’s unlikely that George Osborne will announce an appropriately pauline conversion on Budget Day (oh go on then, surprise me, George!) There is still some way to go before the world leaders who already support such taxes (eg Angela Merkel and Nicholas Sarkozy – not strange bedfellows for Osborne at all, so you never know) manage to convince enough unbelievers, although a majority of Eurozone countries now seem convinced.
But there are a couple of practical steps towards a Robin Hood Tax that the Chancellor certainly could announce which would raise about £6bn a year: a 0.005% levy on sterling currency transactions, and extending the 0.5% Stamp Duty on share transactions to cover the trading that banks do on their own account, rather than for clients (who already pay that tax).
A currency transaction levy was something we suggested under the last budget by Alistair Darling, and we predicted it would raise about £3bn a year. The same would be raised if we extended Stamp Duty (already the highest yielding financial transactions tax in the world) to cover banks’ own account share transactions. That wouldn’t affect the pension fund trading in shares, or share trading on behalf of individuals or even companies – because those are already taxed. Instead, it would fall specifically on banks own activities, and would be much more in line with the Chancellor’s own plans to tax the finance sector just a little bit harder. So go on, George, take a little step along the road to Damascus!