Monthly Archives: March 2012

‘Tax the banks, not the poor’ sentiment overwhelms budget

Robin Hood’s mantra has been causing quite a stir this week.

The recent Budget has been labeled a ‘Budget by the rich, for the rich,’ particularly because of the reduction of the 50p tax rate to 45p from next year.

Simon Chouffot, spokesperson for the Robin Hood Tax campaign said “This is less a ‘Robin Hood’ Budget and more Sheriff of Nottingham – protecting the privileged few at the expense of services for the poorest.

Osborne is barking up the wrong tree in this Budget. He won’t bring down the deficit and protect those at the bottom by letting the richest off the hook. If we are really going to ‘earn our way’ out of this economic mess we should be asking the City of London to pay its share. Yet tweaking the bank levy will raise no new money from the Square Mile. This is another good Budget for bankers.”

UK Uncut, Robin Hood Tax campaigners and anti-austerity protestors brilliantly managed to over-shadow MPs reactions to the Budget by chanting ‘tax the banks, not the poor’ which was the soundtrack to all news coverage. Tim Farron, President of the Liberal Democrats said that he didn’t know why the Conservatives were cutting the top tax rate, whilst Chris Leslie, Shadow Treasury Minister said that Labour wouldn’t be endorsing this cut. The public anger evident from this clip is what really stands out.

Paul Kenny, general secretary of the GMB, said: “The different treatment of people at either end of the income scale is stark. Ordinary families are losing their tax credits and child allowances and suffering pay freezes while people on top salaries of £150,000 to £1 million a year are getting cash hand outs.” 

The Budget has also announced a freeze on the tax-free personal allowance of pensioners and is being dubbed the ‘granny tax.’ However, effects of the hardest hit are yet to come – the emphasis on cuts in expenditure that have never been tried before.

Dave Prentis, General Secretary of the union Unison, really hit the nail on the head: “if the 50p tax rate wasn’t effective because people avoided it, the correct action was not to lower it but to make sure people paid it.”

This has been a sad week for people fighting to save the NHS, fighting for justice for the 99%, and fighting against austerity.

One highlight was the fantastic Budget stunt – several hundred protestors were brought together by UK Uncut activists to form a dole queue outside Downing Street. The aim was to recreate Saatchi & Saatchi’s 1979 Tory election campaign ‘Labour isn’t working’ to highlight rising unemployment with a play on words: ‘austerity isn’t working.’

Their efforts were rewarded with coverage on BBC News at One, Six and Ten.

Check out footage of the action featured on the Guardian’s website

“The Chancellor’s Budget has given a helping hand-out to his rich friends in the City and delivered a slap in the face to the unemployed and low paid families.”

A Robin Hood Tax can help to redress the balance of both UK and global inequality. We need to keep telling George Osborne that the cuts aren’t working. Be part of the world’s biggest bank job and ask your MP to support a Robin Hood Tax now


A Report by Professor Avinash Persaud rebuts “disproportionate, inconsistent and disingenuous” attacks on FTT

Professor Avinash Persaud argues that an FTT would increase growth and jobs in Europe

A new report released yesterday aims to systematically dismantle critics’ exaggerated visions of the effects of an FTT on our economy. ‘The Economic Consequences of the EU Proposal for a FTT” report states that a Robin Hood Tax would be good for the UK’s economy, have a positive impact on jobs and growth, and cost the finance sector’s customers far less than the fees bankers levy themselves.

Furthermore, Professor Persaud, a former head of Currency and Commodity Research at JP Morgan, states that the EU’s proposed tax (which is less ambitious than we would like, but welcome nonetheless) would raise £8.4bn in tax revenue for the UK Treasury. It would, contrary to the EU’s own initial and flawed impact assessment raise GDP by 0.25%, equivalent to creating 75,000 jobs in the UK alone. However, the best myth-busting fact in his paper is the comparison between the impact on transaction costs of a 0.1% rate on derivatives, and the amount of money that bankers take out of the system in fees and charges, which amount to tens of billions every year.

The report also points out that the proposed FTT rate of 0.01% – 0.1% is rather modest when compared to other transaction costs such as trading commissions, fees for clearing and administration costs. An FTT would only increase transaction costs to levels seen ten years ago, when arguably the markets were more stable. Seven countries already raise £15.3 billion annually through long standing FTTs. One of the largest and most successful examples is right here in the UK – the stamp duty on shares that raises the government more than £3bn a year.

Even if a Chinese investor uses a French bank in New York to buy a British share, they would still have to pay the tax. This means far from it leading to a loss of business in the UK, around 40% of the tax is paid by non-UK residents.

According to the report, critics’ analysis is “dangerously incomplete” since it focuses only on where the revenue is collected and not where it could be spent. An estimated £8.4bn of additional revenue in the UK could have a huge positive impact: it is enough to avoid all cuts to the education budget, halve cuts to the annual welfare budget or fund the Green Investment Bank three time over.

More fundamentally, a low-rate FTT would would help reduce ‘noise trading’ – a churning mass of short-term speculation that feeds off underlying market trends. Such trading intensifies the boom times, helping to create a mirage of value, but also helps to exacerbate the busts, when in a flash, it disappears.

Professor Persaud asks his fellow bankers the entirely pertinent question: if something as small as an FTT would allegedly cause such damage to investors and the operation of the markets, how much more damage is being done by the fees and charges which dwarf the revenues likely to result from the tax?

This report has received great coverage in the mainstream media and online. Here’s a selection of the best:

Anthony Hilton, Evening Standard “It’s a thing of beauty: ‘A tax that could set the City on its feet”
The Guardian “Don’t believe bankers’ warnings about a Robin Hood Tax”
A blog on the report by Simon Chouffot from the Robin Hood Tax campaign, for Left Foot Forward
Professor Persaud has also been interviewed for CNN, BBC World, BBC World Service, France 24