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Unions seek EU-wide coalition for new ‘Robin Hood’ bank tax

There seems to be no disagreement on where the recent economic crash started: among the banks and other financial institutions. However now that the sector appears to have stabilised, opinons differ as to how to stop it happening again and what the banks should be made to pay back to the governments that rescued them. We examine one solution which is gaining widespread support among European trade unions.

 WHAT DO WE DO ABOUT GREEDY BANKERS? A blunt way, perhaps, of discussing a complex problem but the kind of language being used by political parties, trade union leaders and others under pressure from angry voters and members anxious to know what the punishment will be for the incompetence thet has lost many jobs and closed companies. Expert opinions vary from an unrepentant, free market belief in letting the dealers take care of their own business to the outlawing of hedge funds and short-selling, the breaking up of large banks and bans and even criminal prosecutions for individuals shown to have made excessively risky transactions. An obvious way of ‘getting our money back’ from the banks is a tax. Here too, though, opinons diverge. One model is to take a small percentage of bank assets in a ‘financial crisis responsibility fee’, this would be held by the government and used if another bail-out is needed. This is already up and running in Sweden and due to be instituted in Germany. While the fee may be useful in the future it does nothing to recoup the money already spent; this is what is being attempted in the USA where President Obama intends to impose a levy to raise $117 billion over the next ten years.

Barber, B.Sommer, M.

One of the major stumbling blocks in the way of adopting the tax has always been international agreement with individual countries feeling that their finance industry will be disadvantaged if they go it alone. The European Union would therefore seem to be an ideal body to co-ordinate the start-up of the FTT. German and British unions, the two biggest affiliates to the ETUC certainly think so. They have both been campaigning in their own countries for the measure, which in the UK goes under the name of the Robin Hood Tax, and now they have come together to press the leaders to get it through the Council of Ministers. The two Member States are crucial to progress on the issue as 99% of trading turnover in the EU takes place in Frankfurt or London. In both countries videos have been made with famous actors and Facebook and Twitter pages have proved very popular. Austria and Belgium have already declared in favour of the tax and the European Parliament has voted to examine the details. The Party of European Socialists is organising a day of action with events held across Europe.

Brendan Barber, General Secretary of the UK TUC & Michael Sommer, President of the German DGB

But how about going one step further: a permanent levy that could be used for whatever expenditure was felt beneficial to good causes? This idea is often ascribed to James Tobin, an American economist who proposed in 1972 that currency transactions should attract a 0.5% levy whose proceeds would be paid into the World Bank or the International Monetary Fund. The main aim of the ‘Tobin tax’ was to calm currency markets after exchange rates were freed in 1971 but now campaigners have tweaked the proposal to make it relevant to today’s world economy. The Financial Transaction Tax (FTT) would apply to all forms of financial deals including stocks, bonds and foreign exchange and derivatives (options, forwards, futures and swaps) and would cover both those done on exchanges and directly between institutions. While the rate would vary according to types of transaction it is likely to average 0.05% and raise €100 billion a year across the EU, according to trade unions.



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