Hundreds of economists call for tax on currency speculation

Economics Editor,Sean O'Grady
Monday 15 February 2010 01:00 GMT

Some 350 prominent economists from all over the world have written to the leaders of the G20 calling on them to implement the so-called "Robin Hood tax" on the banks "as a matter of urgency".

Two Nobel prizewinners, including the outspoken critic of the financial system Joseph Stiglitz, and scores of professors at universities from Harvard to Kyoto, are calling on G20 governments to back a financial transactions tax on speculative dealings in foreign currencies, shares and other securities of 0.05 per cent – say £500 on a £1m transaction.

The letter argues: "This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.

"This money is urgently needed. The crises of poverty and of climate change require an historic transfer of billions of dollars from the rich world to the poor world, and this tax would offer a clear way to help fund this."

Professor Sir Tony Atkinson from Cambridge, and Professor Sudhir Anand at Oxford are among senior academics from the UK and 34 other nations supporting the Robin Hood tax. Other British academics backing the plan come from Oxbridge, Sheffield, Warwick, London, Stirling, Essex, Manchester and de Montfort, and economic thinkers from 35 nations are represented in the list of signatories.

Professor Jeff Sachs of Columbia University, also an adviser to UN Secretary general Ban Ki-moon, said: "The transaction tax is technically feasible and morally essential to repair the mess made by the banks.

"I have long advocated such a tax, as a clear way to raise billions of dollars to fight climate change and to achieve the millennium development goals. The transaction tax is the only option on the table at the G20 that will deliver the scale of resources needed."

The Robin Hood tax is also being backed by high-profile showbusiness personalities such as Bill Nighy, who plays a squirmingly embarrassed banker in an online video promoting the tax. Bankers at Goldman Sachs were accused last week of spamming the campaign's web site to engineer an online poll to go against the tax.

The letter goes on to say: "Given the automation of payments, this tax is technically feasible. It is morally right. We call on you to implement it as a matter of urgency."

Confusingly, international plans for a tax or levy on banks are well underway – but this is not the Robin Hood tax. A plan for a levy on the banks will almost certainly be proposed by the IMF at its spring meeting in April, and offered to world leaders for approval.

The G20 leaders requested the Fund to come up with options for a bank levy, designed purely as an insurance fund to deal rescue stricken banks and prevent another meltdown. The IMF's Deputy managing director, John Lipsky, recently told The Independent that the new scheme would not provide a long-term flow of funds to the world's poor or for climate change mitigation, and would be more like the deposit insurance schemes that operate already in the UK and US. Nor are international moves to tax bankers' pay or to impose levies on transactions purely to dampen speculation – the motivation behind the original proposal for a Tobin tax by the American economist James Tobin in 1972 – likely to be agreed by the G20 or the IMF.

For now, at least, neither the G20 leaders nor the IMF seems ready to don the green tunic of Robin Hood.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in