CBI’s opposition to Robin Hood Tax: bit tired and thin
The CBI’s Deputy Director General has opposed a Robin Hood Tax in Accountancy Age, but it’s a pretty feeble attack, and the most interesting thing about the article is that the web version contains lots of links – all adverts for HSBC! It rather suggests that Neil Bentley hasn’t done the reading, as most of his arguments have already been comprehensively rebutted. You do wonder whether he’s actually not that bothered about the tax being introduced, but feels he ought to look like he’s against it, to justify the finance sector’s’ membership subs! But for the record, here’s the rebuttal…
Dr Bentley says that a Financial Transactions Tax would lead to business leaving the UK – citing the well-worn Swedish example (this is always the example used, because the sixteen G20 countries which have or have had such a tax in recent years provide no other example of this phenomenon). Because this is so commonly cited, the Robin Hood Tax campaign have gone into detail about just why the Swedish experiment failed, and why it is really, really easy to design out the fatal flaw that Dr Bentlye says led to trading migrating from Sweden to countries like the UK which …er…. also had – and still have – an FTT in place. Hm, makes yer think, dunnit? Well it obviously failed to make Neil think!
He claims that the costs of an FTT would be passed on to small investors (who, er, already actually pay Stamp Duty on share transactions) and onto the business customers of the banks. This is also easy to answer: the vast majority of transactions that would be taxed are done on behalf of high net worth individuals, not ordinary people. Huge volumes of transactions are the sort of high frequency trading that is done solely on behalf of financial institutions, as the Robin Hood Tax’s latest report explains.
He then argues that supporters of an FTT “cannot argue that the financial services sector does not make a fair tax contribution”. This is a tricky one. Oh, hang on, no it isn’t. The IMF, European Commission, Bank of England, Sir Adair Turner (ex-head of the CBI, as it happens) all agree that the financial sector is under-taxed. And I think it’s a pretty popular view among the electorate, too! The Bank of England has made clear that banks which are too big to fail are benefitting by £100bn a year because of the implicit guarantee that they won’t be allowed to fail.
Lastly, he claims that regulation would be a better way to deal with the problems of the financial sector than taxes which would disincentivise the riskier elements of financial transaction trading – a rather breathtaking claim from an organisation that regularly rails against over-regulation! He draws the conclusion that the real purpose of the Robin Hood Tax might be to raise money. Gosh! Exposed! How ever did he find out?