Ideas for electability: Let’s make a Robin Hood Tax a reality

By Tim Nicholls / @tim_nicholls

The global economic crisis has been, and is, inescapable. What began as irresponsible lending and packaging of derivatives among lenders quickly became an economic downturn of near-depression consequences.

It would be naïve to presume that there is currently a panacea; one that requires no cut in spending at all. But it would be equally naïve to accept the cuts without exploring a radical, but sensible alternative to raise revenue: the Robin Hood Tax.

As proposed, a levy of 0.05% on financial transactions could reap benefits of £20 billion, yes billion, a year. Let’s face it, this is not an inconsequential sum. Under the proposed model, 50% would go to domestic development, and 50% to international development. £10 billion a piece.

Is this an unreasonable price? Critics of the Robin Hood Tax claim it’s penalising the financial sector that we will need to claw our way out of recession. But they are wrong. Although the British economy does, and must, put great store in the financial services industry, it is wrong to say that this levy alone would drive away investment. On the contrary, it will discourage short-termist lending that has such a profound effect on global markets and would, therefore, act to increase market stability. Nor is it likely to scare banks away from the UK, who depend on the stock exchange and access to high-level investors to trade.

Yet, at present, children are bearing the brunt of costs to a much greater extent than the banks. This is in the face of a public that largely holds the banks to blame for the economic downturn. This is neither democratic nor fair.

A Robin Hood Tax would not only be right, it would be popular. Why should middle income families bear the brunt of the bankers’ folly?

Worldwide, the billions of dollars a year that could be raised would help alleviate poverty for the ‘bottom billion’ people who live in absolute poverty- the billion who live without fresh water – as well as the millions of children not in education. International development is essential to the recovery and growth of the UK economy, so the next time that someone tells you that we can no longer afford to give foreign aid, tell them they’re wrong. Not only is there the means to raise tax, there is the need to do so.

So, as George Osborne stood at the despatch box and claimed, in his most Thatcherite tone, “there is no alternative”, we know that he is wrong. Plain wrong. We’re not all in this together: one notable sector, which could reap significant benefits for the good of the UK and the global economy, is definitely not in it with the rest of us.

As support for the Robin Hood Tax grows, it is becoming plain that this is an opportunity for the Labour Party to take the right path, to help ease the pain of the global recession nationally and globally.