René Kinzett is Conservative candidate for Swansea West and leader of the Conservative Group on Swansea Council. Here he responds to the attack on the "Robin Hood Tax" recently posted by Patrick Nolan of Reform.
One of the lines we keep hearing from the Right is that a Financial Transaction Tax (aka Robin Hood Tax) is a good idea but it would never work. Sorry to break it to you all, but we already have lots of transaction taxes and they're working just fine. There's a 0.5% tax on buying and selling shares in the London Stock Exchange. In the US, a small tax on transactions finances the securities and exchanges commission.
So we know it works – and it's already bringing in billions of dollars to governments around the world. The question is really rather simple: do we want to do it?
Let's remember where we are. The actions of the financial sector have wrought havoc around the world. It goes far beyond the trillion pounds or so that the UK Government used to prop up the banks here. People have lost their jobs, export markets painstakingly built up over years have been decimated, and social spending worldwide is set to be slashed. Ideas like the insurance levy are just about setting up a new fund to bail out the banks again should they hit another pothole – it would do nothing to redress the harm that's been done to society as a whole.
As our party’s candidate in Swansea West, I know full well the impact of the economic recession on the poorest people in our communities here in the UK. Swansea has two of the poorest ten wards in Wales, generational joblessness, low educational attainment and a loss of hope for the future are crippling such communities. Without new ways to raise money like the FTT, sooner or later, the people, like my constituents in Swansea, who have already paid once for the crisis through lost jobs and public service cuts will be asked to pay again through rises in income tax or VAT. This really isn't fair.
A financial transaction tax is the only idea on the table that would make sure that banks pay back some of the costs of the financial crisis. The Robin Hood Tax campaign calls for a tax designed in such a way, that banks pay the majority of the tax. It would be charged on 'wholesale' financial transactions – that's the big trades made by banks and other institutions. People changing money at the airport – the so-called 'retail' market – would be exempt. We already know that when prices change in wholesale markets they tend not to be passed on to the retail markets, years of real-life experience bear that out.
Of course it would have an effect on the financial markets. For some people, like Lord Turner and former HSBC Chief economist Roger Bootle, that's exactly the point. Far from increasing volatility, it would dampen down the most risky and volatile trades, and go a small way towards bringing finance back to what it is actually for, which is oiling the wheels of the bits of the economy that make and do things. The sector might shrink a bit too – but given how much it grew before last year's crash, that would just mean getting us back to where we were a few years ago.
In the end some people will always rail at the idea of taxation to help those most in need. Those people probably won't like a financial tax any more than they like any other tax. But for those of us in the real world, where today's politics are all about where the public spending axe should fall and how the government is going to put up taxes to plug the deficit, a transaction tax is a real option.
The Robin Hood Tax – sounds fair to me, not fairytale.