‘Robin Hood’ taxes will rob from everyone
13 May 2017
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IEA reacts to Labour Party's call for a 'Robin Hood Tax'
Commenting on the the Labour Party’s call for the introduction of a ‘Robin Hood Tax’, Julian Jessop, Chief Economist at the Institute of Economic Affairs, said:
“It’s naïve to think that the burden of financial transactions taxes will only fall on banks and speculators. The increased costs would inevitably be passed on to customers, including small investors, in the form of higher charges, and to borrowers in the form of higher interest rates. Non-financial firms will find it more expensive to raise capital and manage risk, which will undermine the economy further.
“Indeed, this is another example of the fallacy that corporations can be tapped for cash with no wider costs. In reality, it’s always ordinary people who ultimately pay, including consumers and workers. Sherwood Forest wasn’t made of magic money trees either.
“Labour’s promise to crack down on tax dodgers is a good soundbite and it’s surely right that companies and individuals should pay what is due. But successive governments have made similar commitments and it’s unclear that Labour’s proposals are a major step forward. Their promise also needs to be set against their plans for large increases in the tax rates payable by large corporations and higher earners. These could actually worsen the problems of tax evasion and avoidance by increasing the incentive to game the system.”
Notes to editors
For media enquiries please contact Stephanie Lis, Director of Communications: slis@iea.org.uk or 07766 221 268.
Relevant IEA publications
In 2011 the Institute of Economic Affairs published ‘The case against a financial transaction tax’, which explains why it wouldn’t work and will damage the economy. To download this please click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.
“It’s naïve to think that the burden of financial transactions taxes will only fall on banks and speculators. The increased costs would inevitably be passed on to customers, including small investors, in the form of higher charges, and to borrowers in the form of higher interest rates. Non-financial firms will find it more expensive to raise capital and manage risk, which will undermine the economy further.
“Indeed, this is another example of the fallacy that corporations can be tapped for cash with no wider costs. In reality, it’s always ordinary people who ultimately pay, including consumers and workers. Sherwood Forest wasn’t made of magic money trees either.
“Labour’s promise to crack down on tax dodgers is a good soundbite and it’s surely right that companies and individuals should pay what is due. But successive governments have made similar commitments and it’s unclear that Labour’s proposals are a major step forward. Their promise also needs to be set against their plans for large increases in the tax rates payable by large corporations and higher earners. These could actually worsen the problems of tax evasion and avoidance by increasing the incentive to game the system.”
Notes to editors
For media enquiries please contact Stephanie Lis, Director of Communications: slis@iea.org.uk or 07766 221 268.
Relevant IEA publications
In 2011 the Institute of Economic Affairs published ‘The case against a financial transaction tax’, which explains why it wouldn’t work and will damage the economy. To download this please click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.
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