From the TUC

Robin Hood would raise £7.6bn a year from currency transactions alone

14 Jun 2011, by in Economics, International

Neil McCulloch, from the Institute of Development Studies at Sussex University, didn’t believe in the Robin Hood Tax, he says. Until he and Grazia Pacillo looked into it, and produced a report called The Tobin Tax: A Review of the Evidence. Tonight, he was speaking in Brussels about how a Robin Hood Tax would definitely work, would raise £7.6bn a year in the UK from a 0.005% tax on currenecy transactions, and would mostly fall either on the traders themselves or on their richest customers. His blog in the Guardian says the same. Quite a conversion, and all the more welcome because of his initial scepticism.

But of course currency transactions are just the start. Stamp Duty on about half the share sales in the UK already raises at least £3bn a year, and could raise twice that. Taxes on derivatives – futures and even more exotic financial products – would raise even more.

2 Responses to Robin Hood would raise £7.6bn a year from currency transactions alone

  1. The Squeeze
    Jun 15th 2011, 3:56 am

    So does the 0.5% FTT on shares apply to market makers? Surely if it did they would pay 0.5% when they buy then 0.5% when they sell. If the actual buyer is paying 0.5% stamp duty and 0.5% FTT that means around a 2% tax.

    0.05% on short term interest rate futures would be quite an exra whack too, presuming you tax the notional amount. Of course, the ‘notional amount’ is just something that is specified in the contract. It could easily be replaced by a contract for different on the actual rate to reduce the ‘notional amount’ and avoid the tax.

    How would you tax a volatility option? What about a covered warrant? There’s still no detail, just theory and hyperbole.

  2. Owen Tudor

    Owen Tudor
    Jun 15th 2011, 8:44 am

    Three quick points:
    * the 0.5% stamp duty on share transactions already IS an FTT – we wouldn’t be adding to the tax rate on that (although note that in the 1960s the rate was considerably higher);
    * you’re right that a lot of detail is still to be decided, but that’s true of any tax reform – the devil is ALWAYS in the detail. However a lot of work has been done on some components like the currency transaction levy – and that’s why we are more certain of the tax take from those better-defined measures; and
    * that also means there is flexibility to decide what to exempt, how to rebate certain activities and so on. The