The campaign for a Robin Hood tax has hit Australia, with high profile Australians and charities (but few economists) lining up to support the cause.
The Robin Hood Tax, pitched to Australians as “a tiny tax on bankers that would give billions to tackle poverty and climate change, here and abroad.” The tax proposes levying a small fee (0.05%) on the trillions of financial transactions every millisecond to amass tax revenue to give to the poor and charities.
The Robin Hood Tax Campaign calls for an 0.05 percent tax on speculative banking transactions (called a financial transaction tax, ‘FTT’), which would raise as much as US$400 billion annually for poverty reduction, climate change action, and investment in domestic health, education and more. Its goal is to build on the current momentum among world leaders and the public interest following the GFC, to achieve support for an FTT which is on the agenda at the G20 in Toronto in June 2010.
Renowned Australian philosopher and ethicist Professor Peter Singer, international banking expert Professor Ross Buckley, political satirist Julian Morrow and Reverend Tim Costello have come together to support Australia’s involvement in a worldwide initiative to reduce global financial instability called the Robin Hood Tax.
Arguably only one of the named supporters of the proposed tax has an understanding of economics and finance, however the campaign for the Robin Hood Tax at this stage is one based around amassing popular support by playing on the emotions of Australians and the societal benefits of the perception that this tax will be taking from the rich and giving to the poor.
The leaders of Europe’s three biggest economies Angela Merkel, Nicolas Sarkozy and Gordon Brown have indicated a degree of support for some kind of financial transaction tax as a populist way to meet domestic budget shortfalls and meet growing demand for services as their populations age.
The Australian Robin Hood Tax campaign plays the emotive card by listing supporters including Jubilee, Oxfam, World Vision and Greenpeace.
The ABC talked to Dr Sam Wylie, a senior fellow at the Melbourne Business School, who argued the idea of a Robin Hood Tax is being promoted by good intentioned but naive people.
“There’s certainly some great people involved. I know that Tim Costello and Peter Singer, for instance, are tremendous Australians and powerful intellects promoting this idea.
“But they’re not finance people. They’re great in their own fields but I really feel that they don’t understand the complexity of the modern financial system.”
Dr Wylie says the tax would undermine legitimate attempts to hedge risk.
“Most of what’s going on in transactions in financial markets is hedging and not speculation,” he said.
“If you’re a company like Qantas, [that] faces a lot of risk associated with the oil price and so they put in place a set of hedges to control the oil price risk that they face.
“So it actually has the potential to do a lot of damage. People think that most of what’s going on in these transactions is really to do with wild speculation. But that’s just not right.”