OP/ED: Solution to world crises dates back to Robin Hood
I had a hard time deciding on a column for this week – do I express the horror of the new McItaly, an Italian MacDonald’s burger that includes artichoke spread and asiago produced under a joint agreement with the Italian government, or cover the idea of solving world poverty? Ambitious as it is, I decided in favour of solving world poverty.
The solution to world poverty? The Robin Hood Tax. The Robin Hood Tax campaign was kicked off this week by a group of over 50 organizations including: Oxfam, the Salvation Army, ActionAid and Save the Children. The campaign calls for the leaders of the United Kingdom’s (UK) political parties to support a global tax on banks to help repair the human damage caused by the global economic crisis, protect public services at home, fight poverty abroad and help foot the bill for climate change. Ambitious, yes, impossible, no.
The suggestion: place a small tax, although proposed rates vary they average .05 per cent of a transaction, on transactions between financial institutions (not personal banking.) According to Oxfam, these tiny taxes would raise hundreds of billions of dollars a year given the scale of transactions – equivalent to $10,000 a day for every one of the 1.2 billion inhabitants of the world’s 30 richest countries. Experts have estimated an international transaction tax system could eventually raise as much as $400 billion every year.
Just imagine, we could address homelessness and poverty at home, help AIDS victims, feed the hungry, and fund infrastructure world-wide. All of these kinds of programs place stress on government agencies across the world. Not only could we address the real problems, we would lower national taxes as the money spent on foreign aid and social services would no longer be needed!
It’s a vision that people have been searching for forever. What a thought: a solution to world crises without any pain. Except, of course, if you’re a banker. Part of the campaign includes a promotional film starring Bill Nighy, and written and directed by Richard Curtis (Four Weddings and a Funeral, Comic Relief). In the film, Nighy tries to talk a banker into the scheme who is, naturally, reluctant to give up his profits. Of course, after all the bailouts of the banking system in the last couple of years and the continuing bonuses being given to their executives, it is hard to swallow the idea that banks can’t afford the tax.
Oxfam says that the Robin Hood Tax is backed by financiers and hundreds of economists who have signed a letter supporting the campaign. The hope is that the initiative will start in the UK, and that other countries will get on board as they watch the success in the UK and European Union.
The market for financial transactions has exploded in the last decade, and is now worth 60 times the global gross domestic product. Before the financial crisis, banking was the most profitable industry in the world, with profits five times that of the pharmaceutical industry, and three times bigger than the privatized utilities according to consultants McKinsey & Company. At the same time the financial sector is not taxed as much as other sectors.
The campaign is calling for countries which levy the tax to keep half the proceeds domestically and for the rest to be split 50-50 between poverty reduction and tackling climate change. The UK’s share of the tax would amount to tens of billions of pounds.
The campaign says that money raised by a Robin Hood Tax could be used avoid cuts to vital public services and for a range of good causes including:
• Meeting the government’s target to eliminate child poverty;
• Ending the benefit trap that makes it too expensive for people to leave welfare and return to work;
• Protecting schools and hospitals at home and abroad under threat of cuts;
• Meeting the Millennium Development Goals to cut child deaths by two-thirds, maternal mortality by two-thirds and tackle malaria and HIV/AIDS; and
• Providing resources to enable a deal to be done on tackling climate change.
The UK campaign is part of an international movement with similar calls being made in the USA, Europe and across the developing world. Gordon Brown, Angela Merkel, Nicolas Sarkozy, Nancy Pelosi, Jose Manuel Barroso, Meles Zenawi (Ethiopia) have all spoken out in recent months in support of some form of transaction tax.
Congratulations to the brain-child who discovered this idea! Let’s get on board and solve the world’s problems!