Oxfam’s Duncan Green has responded to Matthew’s Tobin tax posts of yesterday and also to Owen Barder’s post, which raised concerns about whether financial transactions taxes might have a regressive impact. Duncan’s argument is that a narrow window of opportunity for a Robin Hood Tax on financial transactions has been opened by the financial crisis which could raise cash for good causes. He urges Matthew and Owen to get behind the Robin Hood Tax campaign rather than proposing alternatives.
‘There’s usually a reason why the first best ones [solutions – a wealth tax, as Matthew proposes, for instance] are not already in place – it’s called politics,’ says Duncan. I feel sure Matthew will want to respond, but briefly – in my lunch break – my view is that arguing for a limited tax on wholesale currency transactions, which the literature seems to suggest would be transparent and probably not passed through to the banks’ customers, does not exclude arguing for other progressive climate and development taxes.
So, to push back a little on Duncan’s suggestion that Political Climate is displaying political naivety, it’s worth asking what the strategy of the Robin Hood Tax campaign is? In my view, the politics of taxation are about to be more negotiable than they have been for some time. Fiscal austerity in years to come should, if inequality campaigners are willing to go the distance, open up an opportunity to argue for more progressive taxation to offset some of the pain felt as a result of horrendously deep cuts in public services politicians are currently contemplating and, of concern from a climate change perspective, a slashing of government capital expenditure budgets.
It’s certainly not a bad thing to channel people’s anger at bankers towards a campaign for a financial transactions tax, but careful consideration of where the burden actually falls – one of the main points Matthew was making – is important, otherwise society’s victory will be short lived. Also, it would be a terrible shame if Robin Hood’s campaigners won the arguments for tax on wholesale currency transactions and didn’t translate this victory into a broader call for the taxation of wealth and, fundamental to all tax proposals, a curbing of the tax avoidance industry so that wealth is held where it can be taxed.