The Robin Hood tax has galloped into France, and once again Britain is being pressured to introduce the same thing in its financial sector. It’s a thankless job defending the City at the moment, what with UK banks mired in one scandal after another and Libor-gate still unresolved, but the UK must stand firm in rejecting a tax that, in the words of George Osborne, would be ‘economic suicide for Britain’.
François Hollande has slapped a 0.2 per cent levy on share trading in France, a precursor to a wider European law. Technically a financial transactions tax, ‘Robin Hood’ taxes are so-called because they aim to redistribute wealth from the rich to the poor. David Cameron – who once described the financial transactions tax as ‘quite simply madness’ – and the Chancellor have both said that Britain will consider such a tax only if it’s introduced worldwide, to avoid hurting the City of London. Britain already taxes stock-market transactions through a stamp duty of 0.5 per cent.
The Robin Hood tax is one of those things whose heart is (probably) in the right place, but whose head is not. It’s hoped that the tax will result in more revenue in a country’s coffers, but the reality is that today’s global investors will just skedaddle to other markets where the fiscal regime is less onerous, meaning there’ll be fewer transactions to tax. Hollande says the 0.2 per cent levy will raise about €1.6 billion a year, and that part of this money will go to tackling global poverty and HIV/AIDS – all very well, but 1) how much of this money will actually materialise and 2) what happened to the freedom to decide where one’s money goes and why? Taxation employed as punishment – ‘It’s time for banks to pay up’, went one placard in the Campaign for Robin Hood Tax in the US recently – is wrongheaded and ineffectual.
Chief executive of Société Générale Frédéric Oudéa, has said that Hollande’s latest move may deter international investors in the eurozone, at a time when it can least afford it. Already, US depository banks are refraining from issuing American Depositary Receipts on French stocks, until ‘further clarification’ on whether France’s financial transactions tax applies to ADRs.
Hollande yesterday had a dig at Cameron, thanking the British PM for ‘rolling out the red carpet’ for French athletes to win Olympic medals, in retaliation to Dave’s remarks that Britain would roll out the red carpet for French businesses fleeing the Socialist president’s proposed 75 per cent top rate of tax. But Robin Hood taxation is one arena where Britain should just let the eurozone nations compete among themselves – unlike Olympics-level archery, its players are highly unlikely to meet their targets.
More Spectator for less. Stay informed leading up to the EU referendum and in the aftermath. Subscribe and receive 15 issues delivered for just £15, with full web and app access. Join us.