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THE ROBIN HOOD TAX
Simon Chouffot from the Robin Hood Tax campaign outlines why the time is right to ensure the financial sector pays for the global economic crisis it has created.
The activities of the financial sector sometimes seem like they could only be true in a casino dream world: a pile of $100 bills the height of Everest are gambled in the currency markets every three minutes; tens of millions in bonuses for a single person; bets that could never fail and computer generated algorithms earning money all by themselves.
We all know what happened: two and half years ago, the dream turned into a nightmare as this toogood- to-be-true world came crashing down. Billions were wiped off the value of financial institutions and cash machines were within hours of being switched off. Thanks to a colossal bailout from the public, banks were soon able to relax back into their protected and soporific wonderland.
Yet their actions sparked the largest economic crisis of a generation and the fallout continues to cause many sleepless nights for ordinary families. Schools and other public services are facing massive cuts and more than a million people are expected to lose their jobs as our economy struggles to get back on its feet.
Thirteen million people live in poverty in the UK – one in five of us have to choose between heating their home or buying enough food to put a meal on the table. Around the world 200 million more people have been pushed below the $2 poverty line. This led the Governor of the Bank of England, Mervyn King, to say, “The real cost of this crisis is being borne by people who were absolutely not responsible for it.”
That is why the Robin Hood Tax campaign, of which the NASUWT is a member, was launched 18 months ago – to call on the banks to pay their fair share back to society for the damage they caused. Just as a petroleum company should pay to clear up the aftermath of an oil spill, so the banks should pay for the mess they created.
We are calling for a Financial Transaction Tax – a tiny tax of just 0.05% – every time casino bankers place bets on stocks, bonds, derivatives and currency. It could generate £20 billion in the UK and hundreds of billions globally and represent a viable alternative to the massive cuts announced by the Coalition Government.
It could reduce the number of public sector job losses, give a vital boost to schools, universities and the NHS. In just four and a half days a Robin Hood Tax could raise enough money to avoid the Department of Education‘s £359 million budget cut. In less than four days it could save services such as extended schools and the Connexions being threatened by local authority funding cuts. And it could also raise enough money to help us tackle poverty and climate change around the world.
The beauty of the idea is that it would not fall on the high street banking that we all use, but on the exclusive world of casino banking – a game that is only open to the world's richest institutions and individuals. And, thanks to the electronic nature of the market, it would be easy to collect.
After a decade of growth, Adair Turner, Chairman of the Financial Service Authority described this sector as “swollen” and "beyond a socially reasonable size". Incredibly, it is more than 70 times the size of the real economy of goods and services.
If Goldman Sachs can afford to pay an average bonus of £269,000 to its 35,400 staff and Barclays' boss Bob Diamond pocketed as much as £60 million last year, it is clear that banks can afford to give a bit more back.
So who's in the Robin Hood Tax campaign? We are one of the broadest coalitions the UK has ever seen, consisting of over 115 international development and (Continued on page 29...)