Since the economic crisis, people everywhere have been calling for a major review of the way banks function in the world today. In a big step towards a Robin Hood Tax, the IMF (International Monetary Fund) has made substantial progress in redressing the balance between banks and the rest of society by calling for major taxes on banks and hedge funds.
But as well as taking from the rich, Robin Hood also gave to the poor. The IMF tax should not just be about saving money in case banks mess up again, it must also deliver hundreds of billions of pounds to help millions of people hit by the economic crisis here and abroad, and to fight climate change. Only then will it become a true Robin Hood Tax.
The IMF proposal
The IMF is proposing two taxes on banks and financial institutions.
They want a flat levy on all financial institutions to help insure against a future bank crisis. And they want a tax on the profits and incomes of banks and other financial institutions such as hedge funds to help pay for the costs of the current crisis.
The IMF proposed tax is not a transaction tax, which is what the Robin Hood Tax campaign has been calling for (0.05% on all transactions), it is a tax on profits and incomes of banks and other financial institutions.
The IMF did analyse a transaction tax. They said it was practical and that many countries already have them. But they concluded it was not the best way to repay the costs of the crisis and that further investigation of it was beyond the remit of the mandate given to them by the G20.
Fighting poverty and climate change
The IMF tax is a major step towards a Robin Hood Tax, but it fails on two counts. It’s not ambitious enough and makes no commitment to helping the poor and fighting climate change.
The Robin Hood Tax campaign is about instigating a tax on banks that will raise billions every year to help both the poor and the planet. We believe that a tiny tax of 0.05% on all transactions is the best way to achieve this.
However, if the IMF tax on profits can also raise hundreds of billions and be linked to fighting poverty and climate change we would be hugely supportive of it.
What are the politicians saying?
The parties in the UK all want to tax the banks – but the taxes they are talking about would only raise around 7 billion pounds each year. This wouldn’t raise any where near enough to fight poverty and climate change.
All three parties need to show much more ambition. They need to take fighting poverty and climate change seriously. A tiny tax on the banks could raise hundreds of billions of pounds, making a huge difference where it’s really needed.
Give and take
The IMF did not dismiss a transaction tax – they said it was practical, but favoured another kind of tax on profits and bonuses.
If this proposed tax delivers hundreds of billions of dollars for the poor both at home in the UK and abroad then it becomes as much a Robin Hood Tax as a tax on transactions.
Robin Hood was a champion of the poor. Banking and finance is the most profitable industry in the world. Since the crisis, banks have bounced back and made hundreds of billions of dollars of profit and still paid out huge bonuses.
And that is the point of the Robin Hood Tax campaign. Banks can afford to pay an ambitious tax, and whether it is the IMF proposal or not, we must see hundreds of billions of dollars raised from the banks each year used to help those who need it most.