Letter in The Daily Telegraph on proposals to impose a "Robin Hood" tax on banks
First, it is not tiny. The headline rate is only part of the cost. There are the administrative and IT costs of collecting it, paying it and policing compliance. There are economic costs, too, as people switch into less productive investments to avoid it, and as finance moves to other countries that do not impose it.
Secondly, it is not a tax on banks. They will simply pass the cost on to their customers – everyone with a bank account, an insurance policy, a mortgage, a loan, or pension savings. It is we, the public, who will pay this new stealth tax.
Thirdly, it will not help the poor. The tax revenue will be administered by governments, so politics, not economic sense, will determine where it goes.
Poor countries need access to affordable capital to fuel their development. This tax will raise the cost of capital and make capital markets less efficient, starving poorer countries of that fuel.
If celebrities really want to help the world’s poor, they should campaign for governments in the EU and elsewhere to drop the protectionist tariffs that deny people in poorer countries a market for their products. That would be simpler, and benefit the whole of humanity.
Dr Eamonn Butler (Director, Adam Smith Institute), Dr Madsen Pirie (President, Adam Smith Institute), Shane Frith (Director, Progressive Vision), Tim Ambler (Honorary Senior Research Fellow, London Business School), Mark Littlewood (Director-General, Institute of Economic Affairs), Dr Tim Evans (CEO, Cobden Centre), Prof Philip Booth (Editorial & Programme Director, Institute of Economic Affairs), Richard Teather (Senior Lecturer in Tax Law, Bournemouth University), Prof Patrick Minford (Professor of Applied Economics, Cardiff University Business School), Prof Julian Morris (Executive Director, International Policy Network), Jill Kirby (Director, Centre for Policy Studies), Keith Boyfield (Chairman, Regulatory Evaluation Group), Richard Jeffrey (Regulatory Evaluation Group), Mark Austen (Regulatory Evaluation Group), David B. Smith (Visiting Professor, University of Derby), Dr Peter Warburton (Economic Perspectives Ltd), Eric Anstee (Managing Partner, Anstee Associates)