Robin Hood tax

News stories about a Financial Transaction tax have been few and far between. Among the first proponents of a financial transaction tax was John Maynard Keynes, who first proposed his version in 1936. He proposed that a small transaction tax should be levied on share dealings, where he argued that excessive speculation by financial traders increased volatility.

A Robin Hood tax has been supported by some 350 economists in a letter written to the G20, including Joseph Stiglitz and Jeffery Sachs. Politicians supporting the tax include Angela Merkel, Nicolas Sarkozy and Katsuya Okada, Japan’s foreign minister. On December 7, 2009 Nancy Pelosi, Speaker of the United States House of Representatives stated her support for a “G20 global financial tax.” But it seems that because a financial tax would hurt city traders it will never happen; on the other hand – Quantitative Easing (QE) is popular with most Governments. Why it is suitable for the UK at this present time escapes me. Economist Martin Feldstein says that QE2 led to higher inflation in the second half of 2010. I thought inflation was one of the things that is making the average person poorer? UK CPI inflation rate in August was 4.5%.

But of course QE is said to pump money into the banking sector that has had it so hard in recent years. In 2009 Alistair Darling brought in a 50% tax on any bonus worth more than £25,000. Those bankers and city traders must be really close to David Cameron and the Conservative Party, more than half of its donors are ‘from the City’. According to the Bureau of Investigative Journalism firms and individuals ‘from the City’ donated £11.4m in 2010 to the Conservative Party. The Financial Transaction tax has been dubbed a Robin Hood tax, of which I think David Cameron is quite the opposite.

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