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