For the Tobin tax

Originally published @ 6:20 am, Tue 15th Dec 2009

Was in a debate on the Tobin tax yesterday. ( http://en.wikipedia.org/wiki/Tobin_tax )

Gist is, tax financial transactions (especially currency transactions) cos it can change the behaviour of speculators and place more emphasis on the importance of value and worth, rather than price. And meanwhile, the slightest amount of tax on each transaction can yield billions.

Now we used to have a share transaction tax in Britain, but Thatcher got rid of it. And no doubt part of the argument was that shares would merely be traded elsewhere in the globalised economy, cos they were taxed here. (Another example of how Keynesian ideas were undermined by globalisation.)

But now there’s an opportunity for agreeing such taxes at an international level so that it’s done everywhere, and the money raised could be used for development in poorer countries and to mitigate climate change.

The head of the Financial Services Authority kicked the idea off again, Gordon Brown has spoken for it, as I believe have the French and the Germans. Even the speculator who ripped Britain off on Black Wednesday in 1992 supports it.

The proposal was endorsed at last week’s meeting of European leaders and advocated in an Observer editorial on Sunday ( http://www.guardian.co.uk/commentisfree/2009/dec/13/editorial-tobin-tax-gordon-brown ).

Slightly surprisingly, the Tories in the debate wanted to argue that the idea was a distraction from the current economic and public finances debate. As if somehow, the pre-Budget report hadn’t been given enough attention. To which I pointed out, we were still waiting for their proposals for public expenditure.