Waiting for Tobin

My Tobin Tax post yesterday about a wealth tax for adaptation has attracted quite a lot of discussion, which is great. Much of it is along the lines of “interesting idea in theory, but it will never work in practice, unlike the Tobin tax”. The view seems to be that campaigners have been working on the Tobin tax idea for so long, all the angles have been worked out, so the “due diligence” has been done, as Andrew Simms of the New Economics Foundation put it in an e-mail (or at least, that’s what I think he meant….). Not everyone seems convinced – Owen Barder raises problems about tax incidence, and some right wing economists think the whole idea is impracticable and wrong. I guess they would say that wouldn’t they…?

As I said in the post, I’m not against the Tobin Tax, rather, mainly interested in exploring some of the deeper ideas about intergenerational justice and climate change. However, I do take issue with the view that a wealth tax for adaptation is pie in the sky, while the Tobin tax is practically a done deal. Tobin proposed his currency transaction tax back in 1972, almost 40 years ago. Despite years of campaigning, we’ve yet to see it come to reality. But wealth taxes have existed in various forms for hundreds of years. In the UK we have taxes on property (council tax, and arguably stamp duty), financial wealth (capital gains tax) and income from wealth (i.e. tax on dividend and interest income), and tax on all forms of wealth (inheritance tax). Any one of all of these could be extended to fund adaptation, and not withstanding hissing geese (see Tony Dolphin’s comment!), the amounts involved are very small.

The real political problems are likely to lie elsewhere, regardless of how the cash is raised. The polling in marginal constituencies ippr conducted last September showed that one of the most powerful barriers against support for financial assistance for adaptation in developing countries is concern about corruption and misuse of funds.