By Neil McCulloch
Financial Transaction Taxes (FTTs) have been back in the media spotlight this week, with a new briefing paper published by the UK’s Robin Hood Tax campaign.
The report claims that it would take about 18 years for the banks to repay the costs of the financial crisis (based on the IMF estimate that the cost of government debt arising from the crisis is £737bn, and also the £203bn tax taken from the financial sector in the five years leading up to 2007). See The Guardian, The Scotsman and The Independent for analysis of the new report.
The campaigners are asking for an extra £20bn of taxes on financial institutions, and they’re pushing for “a Financial Transaction Tax of 0.05% on stocks, shares, bonds, currency and derivatives.”
Whilst campaigners like the RHT activists and other NGOs are arguing the moral case for making the bankers pay for their mess, I think the real issue is a much more practical one: Would it actually be feasible to implement an FTT on a national, regional or global level? It’s all very well wanting something on an ideological basis, but policymakers need to be convinced that a tax could actually work in practice.
Next Tuesday IDS is co-hosting an event in Brussels that’s looking at this very issue: is an FTT a viable solution, or an impossible dream? I’m going to be launching my new Research Report (which is a review of the evidence for and against an FTT) and we’ll be hearing from representatives from the financial sector, NGOs, academia and the EU.
I hope it’ll be a good opportunity to see what the evidence really says on this issue, and get to the bottom of some of the practical issues for implementing an FTT. I’ll be blogging from the event, so check back next week for an update.