From the TUC

Osborne reduces Britain’s Robin Hood Tax to suck up to the City: we foot the bill

30 Mar 2013, by in International

Janet has already blogged on how unlikely it is that the Chancellor’s remission of stamp duty on AIM-listed shares in the Budget will meet his stated objective. But as he admitted when announcing the exemption, it’s worse than that, because, in his own words:

“In parts of Europe they’re introducing a financial transaction tax. Here in Britain we’re getting rid of one.”

So, what does the Budget mean for our efforts to get Britain to join the tide and sign up to the European Union Robin Hood Tax?

Well, for a start, ‘getting rid’ of an FTT is hardly true – he’s just extending existing exemptions, and giving up about £175m a year out of the £3bn usually raised from Stamp Duty – that’s about 6%. If he had closed all the loopholes already in the tax, he’d have raised about another £3bn instead, doubling the revenue raised. So it’s actually small beer.

Given that, as Janet says, the move actually won’t achieve the stated objective of shifting the tax bias for investment from debt to equity (as she says, the sums involved make his move a gnat’s bite even if it was in the right direction) why did he do it?

As with so many of the Chancellor’s actions (including austerity itself), this was almost certainly a political move, not an economic one.

The move allowed him to look like he was helping small businesses secure investment (while actually cutting taxes for share dealers). The move allowed him to cock a snook at the European Commission and 11 countries currently negotiating a European Robin Hood Tax, over objections from the City’s bonus-fuelled fat cat bankers. And it allowed him to pander to the City funded think tank Centre:Forum who proposed exactly this move (if he couldn’t go the whole hog and dump £3bn in tax revenues – thank the stars he’s tight) in February.

And who pays the bill for this politically motivated, economically pointless two fingers to the EU? You and me, either in tax increases elsewhere or cuts in public services.

I am indebted to David Hillman at Stamp Out Poverty for much of the detail and analysis above. And much though I’d like to share the blame for any errors similarly, I can’t – they’re all mine!

2 Responses to Osborne reduces Britain’s Robin Hood Tax to suck up to the City: we foot the bill

  1. John
    Apr 1st 2013, 3:02 am

    Yet another concerning article Owen. After reading this I shall not let this ‘anti do anything that is not tory policy’ Chancellor get me & like thinking people down. I quote from a recent reader comment from an environmental article in The Guardian:

    ´´As for George Osborne and his ‘feathered obstacles to development’…I lack the words to describe my disdain for this man. How can there be a person so devoid of soul, so lacking in empathy, with such an inability to grasp the value of anything beyond a profit and loss account?´´.

    Nothing is going to change overnight when a new government is voted in May 2015. They will need to be totally upfront on what is needed to be done to get all this country up & running on full. This must include a complete reappraisal of the whole banking system; fair capitalism, not a completely lop sided one as now; & a much fairer redistribution of earnings, tax, wealth with a positive industrial programme for worker cooperatives. The list could go on & on.

    A very strong centre left leader and government will be required for all this. We have less than two years to be ready!

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