By Lucy Phillips
26 April 2010
Campaigners have called for further taxes on banks to help plug the public deficit as it emerged that proposals from the International Monetary Fund would have little impact.
Last week, the IMF urged G20 countries to adopt two new global taxes on banks – a flat rate levy to fund any future bail-outs and a further tax on pay and profits. Finance ministers across the nations are currently discussing the plans, which were welcomed by Chancellor Alistair Darling.
But Adam Lent, head of economics at the Trades Union Congress, said the proposals amounted to little more than an insurance scheme for banks. ‘It does not deal with the notion that banks need to help clear up the mess of the recession and draw down the deficit,’ he told Public Finance.
The TUC is one of over 100 organisations supporting a campaign calling on G20 governments to adopt a ‘Robin Hood’ – or transaction – tax on banks. The campaigners say such a tax has the power to raise billions every year, helping to pay off government deficits, maintain public services in the face of spending cuts and raise money to fight climate change and poverty.
Lent said the IMF proposals were a ‘step towards’ a Robin Hood tax. But he added they were likely to generate only tens of billions of pounds in revenue compared with the hundreds of billions of pounds that a small transactional tax would produce. ‘I’m not convinced they will generate sufficient revenues to clear up the public finances and help with further investment for [economic] growth,’ he said.
All three main parties have committed to some form of tax on the banking sector in their election manifestos, but nothing as radical as a transactional tax. The Conservatives have said they will impose a levy on banks, acting unilaterally if necessary, while Labour has pledged a new global levy on financial services, both aimed at preventing the need for taxpayer bail-outs. The Liberal Democrats would introduce a similar levy until their plans to break up the banks had been completed.
But Lent said the policies were vague. ‘They have all supported some form of bankers’ tax but they all seem to be hedging their bets to see where global negotiations go... We still maintain that a transaction tax would be the most effective way of putting some grit in the wheels and generating sufficient revenue to clear up some of the mess created by the crash,’ he said.
Lent said there was ‘a moral obligation but also a good social and political imperative’ for banks to correct the damage caused by the financial crisis, and a Robin Hood tax would help ‘re-establish their contract with society’. He said: ‘It’s not [the fault] of the bankers alone but they bear a pretty major responsibility for the mess we are in.’
26 April 2010
Campaigners have called for further taxes on banks to help plug the public deficit as it emerged that proposals from the International Monetary Fund would have little impact.
Last week, the IMF urged G20 countries to adopt two new global taxes on banks – a flat rate levy to fund any future bail-outs and a further tax on pay and profits. Finance ministers across the nations are currently discussing the plans, which were welcomed by Chancellor Alistair Darling.
But Adam Lent, head of economics at the Trades Union Congress, said the proposals amounted to little more than an insurance scheme for banks. ‘It does not deal with the notion that banks need to help clear up the mess of the recession and draw down the deficit,’ he told Public Finance.
The TUC is one of over 100 organisations supporting a campaign calling on G20 governments to adopt a ‘Robin Hood’ – or transaction – tax on banks. The campaigners say such a tax has the power to raise billions every year, helping to pay off government deficits, maintain public services in the face of spending cuts and raise money to fight climate change and poverty.
Lent said the IMF proposals were a ‘step towards’ a Robin Hood tax. But he added they were likely to generate only tens of billions of pounds in revenue compared with the hundreds of billions of pounds that a small transactional tax would produce. ‘I’m not convinced they will generate sufficient revenues to clear up the public finances and help with further investment for [economic] growth,’ he said.
All three main parties have committed to some form of tax on the banking sector in their election manifestos, but nothing as radical as a transactional tax. The Conservatives have said they will impose a levy on banks, acting unilaterally if necessary, while Labour has pledged a new global levy on financial services, both aimed at preventing the need for taxpayer bail-outs. The Liberal Democrats would introduce a similar levy until their plans to break up the banks had been completed.
But Lent said the policies were vague. ‘They have all supported some form of bankers’ tax but they all seem to be hedging their bets to see where global negotiations go... We still maintain that a transaction tax would be the most effective way of putting some grit in the wheels and generating sufficient revenue to clear up some of the mess created by the crash,’ he said.
Lent said there was ‘a moral obligation but also a good social and political imperative’ for banks to correct the damage caused by the financial crisis, and a Robin Hood tax would help ‘re-establish their contract with society’. He said: ‘It’s not [the fault] of the bankers alone but they bear a pretty major responsibility for the mess we are in.’
