As the union which represents staff in the financial services sector, Unite has seen the devastating impact that the financial turmoil which has gripped the world has brought on staff. Unite has expressed concern that the crisis has brought insecurity to staff in the UK and damaged the reputation of this vital sector of the economy.
It is unlikely to be too long before the finance industry is back to ‘business as usual’ with extraordinarily high profits being made by the banking sector which can more than pay for such a financial transaction tax. To put things in context, prior to the crisis in 2007 the top 5 UK banks made profits amounting to £40 billion.
We already see huge bonuses being paid out to investment bankers who continue to receive bonuses based on risky behaviour, despite the fragile recovery. The ‘Robin Hood’ tax would help to reduce the speculative short selling of financial transactions and the quick gain incentives used by financial institutions to increase profits, which was identified as one of the main causes of the crisis.
UK taxpayers have paid out over £850 billion to stabilise the UK finance sector. As a result, the Government has had tough choices to make which has led to a dramatic reduction in public sector spending. A financial transaction tax will provide much needed funds to repay the public purse and to ensure public services are protected.
The cost of such a tax is minimal – perhaps as low a 5p in every £1,000 traded – and will only apply to trading between financial institutions. Therefore, for little cost to companies who trade in stocks and derivatives, the finance sector can give something back to society towards repayment for the crisis it created in the global economy and the billions of pounds it has received in maintenance.
Unite believes that the introduction of a financial transaction tax would be a justified response to Lord Turner’s comments questioning whether sections of the finance sector were ‘socially useful’. Traders themselves would become part of the solution and not just seen as part of the problem.