Tomorrow the finance ministers of Europe will gather in Luxemburg to discuss the problems besetting Europe’s economies. It will be a grim meeting. But at the end of the agenda*, like ‘hope’ at the bottom of Pandora’s Box, there is a potential solution to at least some of Europe’s economic woes: the Robin Hood Tax.
So now is a great time for 52 current or former financiers to break ranks with the anti-Robin Hood Tax consensus in the financial sector, and back the financial transactions tax in an open letter published today. They say:
“As individuals with first-hand knowledge and significant experience in the financial industry, we urge you to introduce small financial transaction taxes (FTTs). These taxes will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets. They also have the potential to raise significant revenue.”
And while they rightly stress the revenues that can be generated to spend on global public goods – combatting poverty at home and abroad and tackling climate change – the authors are actually more interested in the impacts of a Robin Hood Tax on the markets they know so much about:
“Concerns have been raised that FTTs could damage growth. But a growing body of evidence suggests that by reducing volatility and raising much needed revenue, the overall effect would be positive. Critics have also wrongly associated trading volume with efficiency-enhancing liquidity and failed to sufficiently take into account market resilience and trust that are undermined in a world where very short-term trading dominates the financial system. As many notable economists have observed, a modest transaction tax will actually improve the functioning of markets.”
The letter gives further backing to a tax which is already clearly popular with electorates, as the ITUC’s multi-country opinion poll demonstrated earlier this month, and has the endorsement of a thousand-strong list of economists. It’s unlikely that we’d ever get a majority of the financial sector to support the Robin Hood Tax (although the unions representing bank workers do, here and globally), but the fact that some people who know the sector inside out back the tax makes it all the more urgent that the EU finance ministers make progress this week.
* Actually it’s only at the bottom of the agenda because the Danish Government that holds the Presidency wants to delay a decision until Cyprus takes over at the end of the month, not least because the Danish Government is split on the issue. But four of the Eurozone economies – France, Germany, Austria and Belgium – are reportedly furious about this bureaucratic manoeuvre and may well push it up the agenda!