Time for a serious, modern tax

Posted on 01-08-20 by Antony Craven Number of votes: 0 | Number of comments: 0

The concept of the Tobin Tax is an idea whose time has come of age. The original intention of James Tobin was to tax spot FX deals to prevent short term trading. 

However, in addition, a Tobin type tax could be used to raise important revenue for growth, climate remediation, and social welfare (NHS, Social Care, etc) as well as providing an important indicator for tackling inequality and achieving fairness in the contribution to our society. 

The 2 greatest assets in the economy are the FX and the Derivatives businesses in London. They stand at $6.6 trillion and $12 trillion (gross market value with a $640 trillion notional market value) respectively with London commanding 43% and 50% of the markets. 

Any argument against a Tobin type tax on these transactions falls away, and a tiny % tax would reap massive rewards that would ease life for the most vulnerable. Tobin proposed a half a % rate, 0.5%. This would bring in $14bn. 

Aimed at transactions, there could be no argument that it is a 'politics of envy' grab from rich individuals or corporates who nonetheless reduce their accounting footprint by offshoring funds and profits to avoid contributing to society. 

And following from the pandemic, there could be no argument that every sector must contribute to recovery.

Referring to: Economy, Business and Trade

The Economy, Business and Trade Policy Commission develops Labour's economic and business policy, including industrial strategy and international trade.

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