Bankers are taking far more out of transactions than a Robin Hood Tax would
Avinash Persaud is every anti-Robin Hood Tax fat cat banker’s worst nightmare. A former banker himself, and a professor of economics, he can’t be dismissed as well-meaning but naive, or as a banker-basher. So his report today that a Robin Hood Tax would be good for Britain, have a positive impact on GDP, and cost the finance sector’s customers far less than the fees bankers levy themselves, is “a heat-seeking missile” (in John Major’s phrase) at the opponents of the EU’s plans for a financial transactions tax.
Avinash’s report, commissioned for the Robin Hood Tax campaign, says the EU’s proposed tax (which is less ambitious than the campaign’s proposals, but welcome nonetheless) would raise £8.4bn in tax revenue for the UK Treasury. It would, contrary to the EU’s own initial and flawed impact assessments, raise GDP by 0.25%, equivalent to creating 75,000 jobs in the UK alone.
But the real poison for fat cat bankers in the report is his comparison between the impact on transaction costs of a 0.1% tax rate on shares and 0.01% rate on derivatives, and the amount of money that bankers take out of the system in fees and charges, which amount to tens of billions every year. Professor Persaud asks his fellow bankers the entirely pertinent question: if something as small as an FTT would allegedly cause such damage to investors and the operation of the markets, how much more damage is being done by the fees and charges which dwarf the revenues likely to result from the tax?