By some astonishing oversight, the TUC Blog has failed to report an extremely important view on transaction taxes. This is quite odd, since Touchstone has been assiduous in keeping us up to date every time they find some tenuous reason to proclaim support for Robin Hood Tax, and the TUC is nothing if not a bastion of unbiased, principled reportage. *
Thanks to Tim on ASI, we have the considered, economist views of the World Bank And they echo the points made here and elsewhere: that RH taxes are not the fleabite that the TUC et al suppose they might be; therefore they would have a profound effect on behaviour; not necessarily to stop ‘bad’ things but certainly to make ‘good’ things like saving and investing more expensive; and therefore that they would fail to address the very real problems that afflict banking, finance, and the incentives thereof. Quoting from Tim’s post:
Although the side-effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis … financial transactions taxes could be a threat to fiscal stability if overoptimistically seized upon as a reason for abolishing more reliable revenue sources.
It is only in the febrile atmosphere following such a financial crisis that such ideas can gain any traction at all. Perhaps, though, the supporters of the Robin Hood Tax could come back with some ad hominem complaint against the World Bank. You know: they’re only in it for themselves, they don’t understand economics as well as people like nef, they’re just a bunch of Orange Bookers, mature stuff like that ….
*A method sometimes applied is to say “X thinks that Banks are a problem. So too does the Robin Hood Tax Campaign! See, our mission to solve every world problem with an utterly painless charge on wicked activity is gaining adherents every day!” It is awfully convincing.