Wednesday, March 17, 2010

Tobin Tax, Wall Street Sales Tax, Robin Hood Tax - Britain and Europe Demand that Bankers Pay for the Depression They Have Created!

The Tobin tax or Wall Street sales tax is rapidly gathering momentum worldwide, thanks above all to a bid by British Labour Party MPs to save themselves from all but certain defeat at the hands of the Tories by playing this great economic populist card, which they have dubbed the Robin Hood Tax. If the Labour Party left succeeds with this gambit, it will tend to transform the situation in the US as well, with desperate House and Senate Democrats following the Labour Party example and embracing the Tobin tax or Wall Street sales tax as a means of getting some populist credibility and viability for November. The Republicans, by contrast, will be forced to line up in defense of their Wall Street backers, stripping away all their demagogic Tea Party camouflage. The Obama-Summers-Geithner gang will also be put into a bind: will they oppose a measure demanded by their own Congressional Democrats? I have been campaigning for the Tobin tax for a number of years, and it is an idea whose time has now come.

If a sales tax on financial transactions (Tobin tax, trading tax, securities transfer tax, Robin Hood tax) can bring New Labour back from the dead, it can also defeat Geithner, Summers, Bernanke, Wall Street, and the reactionary Republicans here in the US, while forcing Obama to go along. It is time to make this a world-wide campaign to force the bankers to pay for the world economic depression they have created.

For weeks, British public opinion polls have been unanimous in finding that Gordon Brown and the Labour Party were doomed to succumb before the triumphal march of the reactionary Tories of David Cameron. But in the past month or two, the situation has begun to change, with at least one poll showing the Tories only ahead by a couple of percentage points, meaning that a Conservative Party victory is now in doubt, and a hung parliament with no clear majority for anyone a real possibility. E. J. Dionne of the Washington Post is trying to portray Gordon Brown as a new version of “Giv’em Hell” Harry Truman. But we should remember that Gordon Brown is the politician who inaugurated the financial bailout fad on a world scale in 2007 when he pumped British taxpayer money into the bankrupt hulk of Northern Rock, followed by the Royal Bank of Scotland, Lloyds Bank, and the rest of the bankrupt City of London. So far, Gordon Brown has only flirted with the Robin Hood tax from a distance. So it is not likely that the turnaround has anything to do with Gordon Brown, although widespread fear of draconian cuts in the social safety net under the Tories is playing a major role.

Actor Bill Nighy Dramatizes the Robin Hood Tax
But the real reason may well be growing enthusiasm for the Robin Hood Tax, a version of the Tobin tax or sales tax on derivatives and financial transactions of all sorts — stocks, bonds, foreign exchange, commodity speculation, and other financial transactions. The effort for the Robin Hood tax has been started by the British Trades Union Congress or TUC, the equivalent of the US AFL-CIO. A number of well-known charities like Oxfam and elements of the Labour Party left have also joined in. The result is a website located at which features the famous British actor William Nighy (pronounced Nye) in the role of a greedy City of London finance oligarch who is forced to admit the essential equity and fairness of the Robin Hood Tax, along with the significant sum which a minimal levy could contribute to the public treasury without increasing the tax burden on ordinary Britons. This website is now the focal point for a large mobilization of the British public, backed up internationally by a coalition of political parties and trade unions.

European Parliament for the Tobin Tax, 536 to 80
The Tobin tax campaign also has a European dimension: on March 11, the European Parliament in Brussels approved a resolution demanding a Tobin tax across the European Union by a lopsided vote of 536 to 80 votes. This measure was supported by the Social Democrats, the Christian Democrats, the leftists, and the moderate conservatives, with only the British Tories and a few of their reactionary satellites voting in the negative. The European Commission is thus directed to come up with a plan for implementing such a tax. (In a related development, the European Commission has also announced that it will seek a worldwide ban or severe restriction on certain forms of credit default swaps, one of the most virulently toxic derivatives yet invented, and one which has cost the American taxpayer upwards of $200 billion in the case of the AIG bailout alone. This can be regarded as payback for the bear raid of economic warfare against Greek government bonds launched by hedge funds grouped around George Soros, Goldman Sachs, Bank of America, and other US institutions as a means of relieving pressure on the dollar by getting the euro to collapse faster than the battered US greenback.)

Many of the political forces in Britain which have been aghast at Gordon Brown’s policy of financial bailouts and subservience to the short-term needs of the City of London derivatives speculators are now regrouping around the Robin Hood Tax. This includes significant parts of the Liberal Democratic Party as well as Labour, along with not a few Conservatives. As Polly Toynbee comments in the London Guardian:

“So far Labour has failed to find the words to express public outrage at the financiers’ billowing wealth while the Treasury is drained. Only weeks since launching, the campaign for a Robin Hood tax on all financial transactions has gathered extraordinary support. It hasn’t been hard, so profound is the untapped public anger at the bankers. This week the European parliament voted for it overwhelmingly – 536 to 80 – supported by the social democrats and the majority conservative EPP grouping: opponents were the ECP rump rightwingers the Tories belong to. Nicolas Sarkozy and Angela Merkel support it. Vince Cable will put it into the Lib Dem manifesto. Gordon Brown supports it but, as ever, he wants US support, which is unlikely. Backed here by some 100 organisations from Oxfam to the Salvation Army, Professor Jeffrey Sachs of Columbia University came to London this week to promote the tax, urging the EU to go it alone.

Rarely has a campaign gathered such momentum in so short a time: 140,000 have joined and more gather by the day, besieging MPs ( In this budget, campaigners want a sterling transaction tax, to come in at once. Imposing just 0.005% on every sterling deal is within Britain’s sole control, raising £4bn. If the EU agrees a wider financial transactions tax, it would bring Britain another £4bn – one estimate is £100bn across Europe, to be used at home, in foreign aid and on climate change.” [1]

Westminster Hall Meeting of Labour, Liberal Dems, Tories
An informal meeting of members of the British Parliament was held last week at Westminster Hall, close by the House of Commons, and was attended by MPs from three parties — Labour, Liberal Democrats, and Conservatives. Also present was a representative of the Treasury, the ministry controlled by Chancellor of the Exchequer Alistair Darling, another paladin of the bailout who is nevertheless scrambling to keep his post. The Treasury rep told the MPs that the Robin Hood Tax was being seriously considered.[2]

80% of Britons Want the Robin Hood Tax
A resolution in favor of the Robin Hood Tax has been signed so far by 119 Members of the House of Commons and counting. This statement reads as follows:

“That this House supports the Robin Hood tax campaign which calls for the introduction of a financial transaction tax; notes that by taking an average of 0.05 per cent. from speculative banking transactions, hundreds of billions of pounds could be raised every year to tackle poverty and climate change, at home and abroad; believes that banks, which had a large role in causing the economic crisis, should do more than just pay back the bailouts or insure against future crises; further believes that a Robin Hood tax would be an effective and popular response, with a recent poll finding that 80 per cent. of respondents supported the introduction of a Robin Hood tax; commends the work of all those organisations backing this campaign who have mobilised their supporters to increase the pressure for such change; believes that this tax is an idea that has come of age; and urges the Government to do all possible to ensure that the Robin Hood tax becomes a reality.” [3]

Some Obvious Problems In Sherwood Forest

The proposal for a Robin Hood tax in Britain and similar proposals being raised in Germany and elsewhere have a number of obvious flaws. First, the size of the tax is insufficient, both in absolute terms as well as in regard to the inevitable wear and tear of haggling and the political process. The Robin Hood tax website talks about a tax of 0.05% — just one 20th of 1%. That would be on the low side if it were the final outcome of this political battle. But it is not the final product — it is merely the starting position. By going so low to begin with, the Robin Hood supporters are leaving themselves nothing to bargain with along the way, and they are in grave danger of ending up with an infinitesimal tax asymptotically converging on absolute zero — or maybe with nothing at all. It is far better to start with 1%, a figure that seems reasonable to any normal person when they recall that ordinary people in the United States pay between 6% and 11% sales tax in most states, sometimes even on their grocery bills. Even the AFL-CIO, certainly no bastion of radicalism, is a demanding a Tobin tax of one mill or 1/10 of a cent, twice as much as the Robin Hood proposal. Again, 1% is the best starting point. But many Americans, once they realize that bankers and hedge funds do not pay any sales tax at all, insist that the existing state sales tax which they pay on shoes and clothing for their children simply be applied to financial turnover, resulting in a charge of between 6% and 11%. So perhaps we should indeed listen to the vox populi.

A second objection revolves around the vagueness of the Robin Hood tax in regard to the economic development of the Third World, the developing nations. There is grave danger here that the money obtained will be siphoned off by institutions like the International Monetary Fund, the World Bank and other international lending agencies and used for subterfuges such as paying off predatory imperialist banks who are holding defaulted loans from the less developed countries, while calling the result debt relief for poor countries. In addition, while emergency food aid and other forms of famine, epidemic, and natural disaster relief are indispensable, an extra dimension must also be added in the form of serious capital investments in modern high-technology infrastructure and industry, without which South Asia, Africa, and the poorer parts of Latin America will be condemned to endless poverty and aid dependency. It would be better to specify specific infrastructure projects such as a comprehensive fast rail network for the entire African continent, featuring Cape to Cairo, Dakar to Djibouti, Maghreb, East African, and West African lines. This could be paired with a Tennessee Valley Authority for the combined Nile and Congo River basins to provide irrigation, flood control, hydroelectric power, canal transport, malaria eradication and other benefits. The resulting rail and water systems would benefit every country in Africa, without exception.

A third problem is the constant reference to the discredited climate change/global warming hypothesis, an invention of the financial oligarchs themselves (think of George Soros and the radical environmentalist Hank Paulson). Given the political situation in Europe especially, it is perhaps understandable why these references are included. If dealing with climate change turns out to mean modern nuclear reactors and modern fast rail as a means of reducing the dependency on fossil fuels, then fine. But if it means anti-economical “green jobs” and speculative cap and trade carbon offset markets as demanded by so many in Copenhagen, then we are dealing with a cruel hoax. As a general rule, the more green jobs a country has, the poorer that country will become, since green jobs are inherently anti-economical and require endless subsidies. The entire logic of the global warming argument is to abort and deny the economic development of the Third World, and this is why Third World nations along with China and India took the lead in the Copenhagen talks in blocking the Malthusian carbon dictatorship which the US and the British were striving to impose on the world.

We have just tried to identify the points of disagreement, and give some suggestion as to how they might be resolved. But one thing is certain for all persons of good will: Wall Street and the city of London, not working people, must pay for the depression which they have created.

German and British Unions: Tobin Tax Would Provide $150 Billion
The German and British trade union federations estimate that a European Robin Hood Tax could raise £100 billion (about $150 billion) per year. TUC General Secretary Brendan Barber and DGB President Michael Sommer have called on Gordon Brown and Angela Merkel to push through a European tax on financial transactions. Barber and Sommer go on to say:

“…two markets, Frankfurt and London, account for 99% of all EU trading turnover, even though sellers and purchasers are by no means solely citizens of Germany and Great Britain. The German campaign[4] – the Tax Against Poverty[5] – started 17 October 2009 with an open letter to the German government, asking for the introduction of a Financial Transaction Tax. The open letter has so far been signed by more than 50 German organisations. The campaign unites bishops and bankers, trade unionists and developmental activists, Attac and academics and many more…. The British campaign – the Robin Hood Tax – was launched on 10 February 2010 with support from a broad range of more than 50 British organisations – trade unions, development and climate campaigners, churches and others, including economists and financial experts. Opinion polling for the Robin Hood Tax campaign shows overwhelming support for a Financial Transactions Tax…. We believe that a European Financial Transactions Tax could show leadership to the world. There is no question that the EU – as an independent economic entity – would be in a position to introduce such a tax without any problems or hiccups in trade with the USA. The bank levy discussed by the G7 Finance Ministers in Canada last month, is no alternative for a FTT, it would only pay for the costs of bailing out the banks, leaving the rest of the economic damage done by the crisis unremedied. Only a FTT puts a dampener on speculation; only a FTT makes financial markets transparent; and only a FTT brings permanent revenue. We urge you to go further and to initiate a European Financial Transactions Tax.”[6]

An EU summit in Brussels on March 26 may take up this demand. The Tobin tax is also supported by the International Metalworkers’ Federation, to which the United Auto Workers, United Steelworkers, International Association of Machinists, Communications Workers of America, Boilermakers, and IG Metall in Germany also belong.

Reactionaries Howl, Demand Tax Immunity for Speculation
The reactionaries at the United States Chamber of Commerce in Washington, DC have been howling with rage at the idea that the immunity to taxation currently enjoyed by banks and hedge funds may be lifted, and that they may have to pay some part of their fair share. The favorite argument of the enemies of the Tobin tax is that any tax on financial turnover amounts to vindictive discrimination against bankers as the villains of the hour. The reality is that virtually all other cash flows in the society are already taxed, while financial flows are not. The current situation therefore amounts to a public subsidy for speculation, which has proven once again over the last two years that it is a singularly pernicious and destructive threat to the public good. Once this strawman argument knocked down, the reactionaries are reduced to whining that the Tobin tax is somehow old-fashioned, meaning pre-globalization. The US Chamber of Commerce complains that a Tobin tax would turn the clock back to the bygone days of “disco balls, parachute pants and paper trades.”[7] With many American states, counties, and municipalities near bankruptcy, and right-wing politicians and media demanding austerity and sacrifice from the public along with mass firings and pay cuts for teachers, policemen, firemen, state workers, and other public employees, the simple fact is that Wall Street and its apologists have no cogent arguments whenever it can be made to stand up — once the proposal for a Tobin tax has been introduced.

Sachs, Kuttner, Jesse Jackson, Archbishop Of Canterbury Pro-Tobin
Economists like Jeffrey Sachs and Robert Kuttner are calling for a Tobin tax. They have been joined by Jesse Jackson, who is well aware that Obama’s pro-Wall Street policies have done nothing to alleviate unemployment in the black community. The French government is calling for a Tobin tax, although their proposal exacerbates some of the flaws mentioned above. Most recently, a call for the Robin Hood tax has been issued by Rowan Williams, the Archbishop of Canterbury, the head of the Church of England and a very important figure inside the British ruling elite. Williams and the writer Richard Curtis wrote the in London Sunday Times that a Tobin tax

“…might help to heal the breach that has opened up between banks and society at large by making the financial industry part of the solution, not just the source of the problem. There is a chance to introduce a tax that will recognise both the massive expansion of financial services in recent years and the fact that taxation has not kept pace with this — but also a tax that will generate substantial resources to deal with the urgent global needs that cannot wait for some miraculous turnaround in the economy. The plan is to tax certain transactions between financial institutions….” [8]

This campaign now represents the best available means of striking at the overweening power of the Wall Street and City of London financiers. If the Robin Hood tax reaches critical mass in Britain this spring during the general election campaign, it will automatically be placed squarely in the center of the US agenda for the November congressional elections. Democrats, now threatened with grievous losses, will flock in droves to the idea of a Wall Street sales tax. Republican demagogues will be unmasked, and forced to show their true Wall Street colors. Obama will be presented with a fait accompli which will directly challenge his loyalty to his Wall Street backers. We will not have many more chances to turn the entire US political situation around, so it is imperative to seize on this one and make the most of it, and fast. We urge all persons of good will to mobilize without stint in the framework of this growing international campaign.

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