Originally printed in The Age.
Nearly 800 years after celebrated rogue Robin Hood and his entourage of bandits launched raids from their Sherwood Forest hide-out – redistributing wealth from a greedy and corrupt aristocracy to the starving peasantry – he has been recruited to a new campaign.
This month, 350 prominent economists, including Nobel Prize-winner Joseph Stiglitz, have publicly backed a proposed ”Robin Hood tax” on speculative financial transactions, which could raise about $US400 billion ($A450 billion) a year worldwide to prop up failing infrastructure, boost health and education resources, fight poverty and deliver a kitty for practical climate change action.
The concept is simple. After taxpayers in Australia and around the world pumped billions into the big banks to guarantee deposits, prop up banks, improve liquidity and stave off the worst of the global financial crisis, it’s time to get something back.
The Robin Hood tax proposes a minuscule fee of 0.05 per cent on speculative trades in foreign currencies, shares and other securities.
In Australia, where the windfall of such a move could deliver several billion dollars a year, this kitty could not only be a ”payback” for taxpayers who helped fix the finance sector’s monumental mistakes, it could provide an income stream to deliver vital community infrastructure as we begin dealing with our ageing population.
And while the banks will inevitably attempt to position the concept as a feel-good aberration from a handful of hippies beating their drums, it is anything but.
Indeed, the proposal is a direct response to a challenge from last year’s G20 summit in Pittsburgh, where world leaders gave the International Monetary Fund responsibility for drawing up a plan for a financial transaction tax that could ensure the financial sector contributed both to the cost of bank bailouts and the recovery from the global economic crisis.
Support for such a tax has come not only from the developing world, but major leaders such as British Prime Minister Gordon Brown, German Chancellor Angela Merkel and French President Nicolas Sarkozy, as well as members of the business community, including US billionaires Warren Buffett and George Soros.
Locally, the proposal aligns with the release of the Henry review and plans by the Rudd government to provide a much-needed shake-up of our tax system. More significantly, it provides one possible answer to the many chronic social issues that need immediate action.
Our health and education systems are at breaking point; infrastructure bottlenecks are thwarting opportunities for job creation; homelessness remains as entrenched as ever; and thousands of children are still growing up in poverty.
Each day, traffic in our big cities and regional centres is worsening, roads have become makeshift car parks, and decades of neglect has left public transport unable to cope.
The issue of housing affordability is forcing increasing numbers to our city fringes, away from employment opportunities, transport links and basic social infrastructure.
And with hundreds of thousands of baby boomers sliding into retirement over the coming decade, serious skills shortages and overstretched aged-care services will need to be tackled, and urgently.
Of course, these problems are not uniquely Australian; much of the developed world is attempting to deal with the same issues while juggling substantially higher levels of government debt.
The developing world still suffers from widespread poverty, appallingly high child mortality rates, non-existent health and education services, disease pandemics such as HIV, and starvation.
According to its proponents, the Robin Hood tax is the simplest, fairest solution to these ills. With a tiny tax on bankers, 0.05 per cent of a trade’s value – just $500 tax on every million dollars traded – the global community would raise hundreds of billions of dollars.
The proposal recommends that proceeds be split between domestic and international commitments, with $US200 billion injected annually into the domestic needs of participating countries, $US100 billion set aside for aid programs, international development and disaster relief, and $US100 billion invested in practical climate action, such as construction of renewable power sources.
Implementation of such a tax would be simple and inexpensive. Financial markets are already computerised and heavily automated, allowing the tax to be calculated and recovered with no more than a couple lines of code built into banking software.
Enforcement would be just as easy. Existing market regulation and the monitoring used to prevent money laundering and the financing of terrorism ensure transactions are already heavily scrutinised. And the incredibly low tax rate provides little incentive for avoidance.
The G20 finance ministers and central bank governors will meet in Washington in April. In preparing for this meeting, the Australian government would be wise to thoroughly investigate the possibility of this tax.
Eight hundred years on, it seems Robin Hood is on the ride once more. Certainly, the need to redistribute just a fraction of the world’s wealth to those most in need is just as pressing as ever.
Tanya Martin Office Manager
Jake Wishart Senior Media Adviser