Here, in Lex. You may have to buy the newspaper. It is worth it.
Even so, the discussion deserves a wider airing. As Brazil seems to have demonstrated recently, Tobinesque taxes needn’t be a tithe on growth. Since the country imposed a 2 per cent charge on foreign portfolio investments on October 20th to cool “hot money” inflows, the real has steadily fallen – it is the fourth worst-performing emerging market currency since then – while volatility has slightly ebbed
I would like to point out that – unlike what the crowing TUC and LibCon seem to think – this is NOT a Robin Hood tax. Brazil’s 2% tax is about 40 times’ what Robin Hood is meant to be gathering on the trillions of transactions – in fact 200 times what the currency tax is aimed at. It is not about revenue raising, but changing behaviour: stopping money rushing in and then out. I have no idea what it will raise, but it won’t fund poverty reduction in Brazil, regrettably.
Tobin’s idea is also not the same as the Robin Hood idea, which seems to base a lot of its revenue-raising aspirations on a stamp duty equivalent on all share trading worldwide. Doing the latter would certainly raise costs for investors and borrowers everywhere. Tobin’s original idea would affect FX only. Insofar as it changes behaviour, that was the POINT of it; to stop what he regarded as damaging liquidity. He thought it would reduce volatility.
So: the TUC/Robin Hood Tax is – a ‘tiny’ tax that raise ‘enormous sums’ and has no damaging effects on economic activity, and is somehow magically born by overpaid rentseeking bankers. It’s effect would IMHO damage liquidity and increase volatility.
What the FT warms to: a huge tax that raise not much but does change behaviour and may reduce volatile flows for a developing country, and is borne, probably, by foreign investors and the recipients of their cash.
Not very much in common …