Turning a crisis for the banks into an opportunity for the world!

Jubilee Australia is delighted to be coordinating a broad alliance of development organisations, green groups, think tanks, unions, faith communities, to bring the Robin Hood Tax down under.

A global phenomenon, the Robin Hood Tax, is a suggested “tiny tax” on financial transactions that could raise hundreds of billions of dollars every year to go toward charitable causes. Globally, it is supported by UK Prime Minister Gordon Brown, French President Nicolas Sarkozy, billionaire Warren Buffett, economist Jeffrey Sachs, along with actors Bill Nighy, Sienna Miller and Emma Thompson, among  many, many others.

The magic of the Robin Hood Tax is that it is just a tiny tax on financial transactions. It would not affect high street customers at an everyday level. It would not require everyday Australians to donate money. It would only affect the bottom line of financial institutions – and only an infinitesimal part of that bottom line.

The most recent financial crisis has opened up opportunities for long term change, like this proposal to implement a tax on financial transactions. Jubilee believes the time for transformational change has come. 

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ROBIN HOOD (FINANCIAL TRANSACTIONS) TAX
Background: Since the mid-1990s, talk of a tax on financial transactions has waxed and waned among international economists and policymakers. The concept dates back almost forty years, when the noted economist James Tobin recommended a tax of foreign exchange transactions. The idea has renewed impetus as a result of the desire to find a way to make financial sectors help pay for the large bail-outs and stimulus packages.

In its most recent form, Tobin’s idea has been expanded to include not just currency transactions, but also other kinds such as shares, bonds, securities and derivatives.

Long-term, the Financial transactions Tax (FTT) will not only be a new and innovative source of revenue, but, if set up properly, also be an important part of the strategy to reduce instability in the global financial system.

Given its long history and the renewed relevance, it is no surprise that governments and public alike have shown enthusiastic support for the idea in recent times. Gordon Brown, Nicolas Sarkosy and Angela Merkel all expressed support for the concept ahead of the last G20 Finance Minister’s Conference in St Andrews. Other high-profile supporters include George Soros, Warren Buffet and Paul Krugman.

Civil society campaigners have been raising the issue of the tax for years, and the recent support of European leaders owes much to this work. While the recent successes have buoyed European campaigners to redouble their efforts, even more encouraging is the momentum that is gathering in the US around the issue. A coalition of development, environmental and union groups have coalesced in support of this tax, and significant progress has been made in gaining the support of high-profile supporters in Congress like Nancy Pelosi. Thus far, the Obama Administration has proved more resistant, although Barack Obama himself spoke in support of the idea during the campaign primaries in 2008.

Why now? The tax will not be implemented without the support of the major G20 countries, and thus it is expected that gaining endorsement at the G20 Finance Ministers’ Meeting and the G20 Leaders’ Summit will be necessary for the tax to become a reality.

What needs to be done? The ultimate goal is to gain endorsement for the FTT at the G20 Leaders Summit in Toronto (June). Therefore, the strategy hinges on building support for the tax among Finance Ministers and Treasury Departments of all major G20 countries, including Australia.

What is Jubilee doing? Australia will play an important role, yet to date we are well behind North America and Europe in terms of political support for the tax. Australian Treasurer, Wayne Swan, was one of the people who spoke against the idea at the G20 Finance Meeting in St Andrews last November.

Since the start of the financial crisis late 2008 Jubilee has been working with a global network of civil society campaigners discussing issues of financial system and global governance reform.

In June 2009 Jubilee formed a working group with a number of Australia’s leading academic Professors to raise issues of financial reform with the Australian Government. Together we determined that FTT should be a focus of the groups work in 2010. The recent increase of support for the tax in North America and Europe affirm this decision.

Jubilee is coordinating the campaign to win support for the Financial Transactions Tax in Australia.

Further Reading:

Frequently Asked Questions

At Davos, Sarkozy Calls for Global Finance Rules, NY Times – Jan 28, 2010

What’s not to like? International support is growing for a low but effective tax on financial transactions. John Langmore looks at an idea whose time has come, Inside Story – Jan 6, 2010

Cure for a financial sickness. Ross Buckley, SMH – Dec 18, 2009