Showing posts with label tobin tax. Show all posts
Showing posts with label tobin tax. Show all posts

Friday, August 12, 2016

Why A Tax On Financial Transactions Makes Sense

Robert Reich, for whom I have a great deal of respect, offers this succinct explanation:



You can read more about this issue, also often referred to as the Tobin tax, here.

Tuesday, February 2, 2016

Thinking Beyond The Conventional



We are regularly told, both by governments and their corporate confederates, that these are tough times, and that only patience and a freer hand for business will bring about eventual relief. To the seasoned observer, such a prescription is utter nonsense, of course. Neither an expansion in good-paying jobs nor a contraction of the income gap has occurred under that roadmap.

The fact is there are solutions to many of the problems we face today, whether it be climate change, the grinding poverty that so many contend with, or the sad plight of our native peoples, to name but three. Yet these solutions, while well-known and well-researched, always seem just over the next horizon, never to be realized.

Consider the matter of the guaranteed annual income, which I have written about previously on this blog. A recent piece by Glen Hodgson and Hugh Segal suggests the time is right for such a program, especially since countries in Europe are giving it serious consideration.
How does a guaranteed annual income system work? Basic income support would be delivered as a tax credit (or transfer), administered as part of the income tax system. Existing social welfare programs could be streamlined into this single universal system, thereby reducing public administration and intervention. Earned income for GAI recipients could be taxed at low marginal rates, thereby lowering the existing “welfare wall” of high marginal tax rates for welfare recipients who try to break out of welfare by working and providing a stronger incentive for recipients to work and increase their income.
The benefits of such a program would be many: poverty reduction, better health outcomes, greater labour force engagement, etc. And to top it all off, it would likely save money since it would replace the siloed benefit programs that currently exist, thereby significantly reducing administrative costs.

Even if you don't believe that a guaranteed annual income would be cost effective, there are other untapped sources of revenue that could fill the gaps and do much, much more. One of those sources is a form of the Tobin Tax, a tax on financial transactions.

The New York Times writes:
A financial transaction tax — a per-trade charge on the buying and selling of stocks, bonds and derivatives — is an idea whose time has finally come.

A well-designed financial transaction tax — one that applies a tiny tax rate to an array of transactions and is split between buyers and sellers — would be a progressive way to raise substantial revenue without damaging the markets. A new study by researchers at the nonpartisan Tax Policy Center has found that a 0.1 percent tax rate could bring in $66 billion a year, with 40 percent coming from the top 1 percent of income earners and 75 percent from the top 20 percent. As the rate rises, however, traders would most likely curtail their activity. The tax could bring in $76 billion a year if it was set at 0.3 percent, but above that rate, trading would probably decrease and the total revenue raised would start to fall.
As the editorial points out, it is already being applied in a limited number of countries:
There are already financial transaction taxes in Britain, Switzerland and South Korea as well as in Hong Kong and other developed markets and emerging nations, generally at rates of 0.1 percent to 0.5 percent on stock transfers. In addition, 10 countries in the European Union, including Germany and France, have agreed to apply a common financial transaction tax starting in 2017, though relentless lobbying by investment banks and hedge funds threatens to delay and even derail the effort.
That last sentence, of course, epitomizes the main obstacle to implementation, the opposition of the moneyed forces who seem to see any taxation as a capitulation to some kind of socialist scheme. Unfortunately, those forces seem to almost always have the ear of government.

So despite the propaganda, there are ways to bridge the yawning gulf that separates those who have a lot, and those who have little. Don't let anyone tell you otherwise.

Sunday, May 11, 2014

UPDATED: The 'Robin-Hood Tax' Gains Traction


In a declaration that will likely earn him the designation 'Enemy of the Capitalist State,' Pope Francis recently called upon the world to redistribute its wealth in order to reduce what is likely the greatest socio-economic scourge of our times, income inequality.

In his address to U.N. Secretary-General Ban Ki-moon and other U.N. leaders, the Pope said:

“Specifically, this involves challenging all forms of injustices and resisting the economy of exclusion, the throwaway culture and the culture of death which nowadays sadly risk becoming passively accepted” .

While Francis hinted that a more equitable tax regime would help in this goal, he was short on specifics. Perhaps progressive states in Europe have hit upon an elegant yet simple solution: the Robin Hood Tax, a.k.a. The Tobin Tax, also called, within its Eurpoean context, the European Financial Transaction Tax.

The levy, about which I have written previously on this blog, would be a painless and very progressive measure that could be used not only to address the aforementioned inequality, but also a host of other urgent issues confronting the world. It could create jobs; spur economic development beyond the financial industry; and combat climate change, global poverty and HIV/AIDS.

While it would be naive to believe that any one measure could solve all of our problems, the ability to mitigate them is clearly within the tax's purview.

In the current proposed version backed by an 11-nation coalition, here is how it would work, as reported by Katrina vanden Heuvel in The National:


The proposed tax includes a 0.1 percent tax on stock and bond trades and a tax of 0.01 percent on derivatives. It’s now expected that the tax will indeed be phased in, with the levy on stock-trades comprising the first step. Reportedly, the finance ministers involved in the negotiations plan to use the rest of the year to negotiate over taxes on derivative-trading, which could be introduced later in a second phase. While the German government is reportedly determined to get an agreement from the outset to include derivatives, there has been some resistance, including from the supposedly more left-wing French government.


Its benefits would be many. Opposition to it is fierce and passionate. But with every indication that it is rapidly moving toward a European implementation, a critical mass is being reached. The fact that progressivity is not dead in Europe should give us all enough heart to reignite our passion for a more equitable world, a world in which the neo-liberal agenda no longer completely holds sway as it gives to the few while willfully withholding from the many.

UPDATE: Well, it certainly didn't take long for the right-wing to react to the Pope's suggestion. Let's just say, they didn't take it well:

Wednesday, January 30, 2013

Reflections from Cuba - Civic Responsibility

January 23, 2013:

In a previous post, I compared and contrasted Cuba and Canada in terms of the opportunities for achieving one's potential through access to information, ideas, etc., noting that in Cuba the opportunities are almost non-existent, while sadly, in our country, there are those who choose not to avail themselves of the almost boundless access to ways to develop themselves.

Today I want to consider people who have availed themselves, used the resources available, yet choose to close themselves off from any meaningful participation in our society. While I readily acknowledge that there are so many who do so much to enrich our society, I worry about the willfully ignorant who abdicate what I consider to be everyone's duties as citizens: to be informed, to participate either directly or indirectly in civic debate, and most importantly, to vote.

Socrates said that the unexamined life is not worth living, a view to which I wholeheartedly subscribe. To live only to fulfill one's basic needs and instincts is to exist at the animal level, and while we of course are animals, our potential is much greater than other creatures with whom we share that designation. And because we live in community with others, that potential has the richest chance of realization when we strive together to improve the collective and not just ourselves.

While I have written about and acknowledged the complexity of issues and challenges that we all face and do not pretend to have either the knowledge or the expertise to tackle them, I firmly believe that informed discussion and debate is instrumental in finding solutions. To leave that discussion and decision-making in the hands of those who claim to have the interests of everyone at heart is to betray all of us. To say that one is not political or interested in politics is to turn one's back on one's fellow citizens. To do so is to only live for the self, perhaps the greatest 'sin' of all.

Despite my apparently pessimistic tone here, I do believe that given the right opportunities for engagement, many will rise to the challenges we face. For example, the Occupy Movement, while it seems to have lost its momentum, demonstrated that the right campaign can tap into and harness the deep discontent dwelling within our souls over the status quo. As described by writer Mark Leiren-Young in the December issue of The Walrus, the movement began as a guerrilla campaign by Abuster founder Kalle Lasn with a cryptic poster depicting "a petite ballerina striking an arabesque and Photoshopped onto the back of the iconic Wall Street bull, a phalanx of police in riot gear emerging from the tear gas behind them.... Over the ballerina, in red letters, hung the words 'What is our demand?" Printed below was "September 17th" and the words "Bring tent" followed by the Twitter hastag #ocuppywallstreet." The rest, as they say, is history.

As I write these words in Cuba, I have learned that eleven EU countries, including France, Germany, Greece and Spain are now preparing to enact the Tobin tax, something vehemently fought against by entrenched interests, that will impose a miniscule tax on currency transactions and other financial transactions. It is a good and encouraging response to the depredations wrought by reckless and herdless speculation, and I cannot help but believe it is also in reaction to an outraged European citizenry that has grown increasingly restive under the burden they have been expected to bear for problems not largely of their making. Interesting, the Tobin tax was precisely what Mallet Lasn had in mind with his Occupy poster.

So change for the better is possible, given the right conditions, stimulation, awareness and passion. But it cannot and will not occur in a vacuum.

John Kennedy's best remembered excerpt from his Inaugural Address is the following:

Ask not what your country can do for you, but what you can do for your country.

Perhaps being engaged in the issues of our times and participating accordingly is the best way to most benefit our country and our world today.

Sunday, October 16, 2011

The Latest Threat To Financial Stability? Canadian Obstructionism

While we reflect on the concepts brought forth by the Occupy movement, namely that the many are ill-served by the control exerted by the few, we should also consider the role that our own government is playing in the world.

I have written extensively on the shame our government has brought to our name internationally by its unrepentant support of the export of asbestos to developing countries, going so far as to prevent it even being listed as a toxic substance under the Rotterdam Convention's Annex 111 classification.

Equally shameful is the obstructionist role Canada is playing at this weekend's pre-G20 meeting, when it tries to thwart a European proposal to add a minuscule tax on financial transactions that would yields billions in revenue to cash-strapped nations in Europe. In Canada, such a tax could generate more than $3.7 billion annually.

The proposal that our Finance Minister Jim Flaherty finds so threatening is as follows:

...a tiny tax of 0.1 per cent ($1 per $1,000) on transactions of stocks or bonds and only 0.001 per cent (1 cent per $1,000) on transactions of financial derivatives.

So a stock trade of $100,000 would cost an additional $100. Who is threatened by this?

And this isn't the first time the Harper government has worked against the interests of the majority. Prior to the 2010 Toronto G20 summit, he and his cabinet minister colleagues embarked on an international campaign to scuttle an IMF proposal for a levy on banks. As a result, the agreement by G20 leaders at the 2009 Pittsburgh summit to have the financial industry make a “fair and substantial contribution” for the costs of the crisis remains
unfulfilled.


Now what is it again that the Occupation movement has been saying about the 1%?