Robbing From the Rich – The Robin Hood Tax

A blow has been struck for the British banking industry as The European Court of Justice rejected a UK Treasury legal challenge against the so-called Robin Hood Tax, or Tobin Tax, but Chancellor George Osborne has nobody to blame but himself.

The tax, also known as the financial transaction tax, is a levy on all financial deals, such as the trading of shares and it is feared this will force the financial services industry to relocate to America and Asia where the tax does not exist.

However, when George Osborne went into bat for British bankers he forgot one thing. The reason this is in place is largely his fault.

The public have become increasingly frustrated about the fact the perpetrators of the financial crisis, otherwise known as the banks, have seemingly not been punished at all.

So far just a few bankers have faced criminal charges over their greed, speculation and dodgy trading, while the financial institutions have faced little or no action over their part in the economic disaster.

While government debt did not help the situation it was the banks fault the crisis occurred, the deficit issue exacerbated it, but was not the cause.

Unfortunately, while the public has been rightly demanding some action be taken over the institutions which led to the hardest-hitting recession in history their government has done what many previous governments have done and cozied-up to the city.

Getting deals on things like bankers pay, bonuses, transaction taxes and general regulation is not going to be easy and will require a global effort to ensure the financial institutions are not simply able to move location to avoid the scrutiny.

However, when people like Osborne dilly-dally on such an important issue, to the extent where we are six-years further on and tantamount to nothing has been done, it is hardly surprising when sketchy plans like the Robin Hood Tax are introduced.

Where has his leadership been on this issue?

It has to be accepted there are some genuine problems with the Tobin Tax.

Firstly it applies to every transaction, so ordinary people trading in shares as part of a pension fund or ISA are just as liable to get hit as a high-flying investment banker on a trading floor.

Secondly, the banking sector is very important to the UK and the risk of losing it to New York or Singapore is a very real possibility and could hit hard, but the fact they have remained largely unpunished for their role in the crisis means measures like a transaction tax are going to be very popular.

Lastly, while the banks could easily afford to cover the costs of this tax, the cost will undoubtedly be passed onto the consumers making loans, mortgages and saving in general more expensive.

I agree with the Chancellor this tax is potentially damaging to the city and the place of London as a financial centre, but where are his proposals to ensure another financial crash does not occur and to punish the bankers who caused it?

There is no benefit is calling foul when legislation is passed on something you don’t like when you have not proposed any alternatives.

Yes, the tax is questionable, but when you do nothing you cannot be surprised when something like this has popular support and ends up being law.

This will be the subject of future legal challenges, but is Osborne wants to overturn it he has to make a better argument than it is bad for the city and offer alternatives to satisfy the public as well as the square mile.