Being a citizen of a country that seems to be facing fire from all angles, I feel the duty if not to help, at least to take the time and read about what is going on in the Member State I live in. That is how I stumbled upon something that my basic understanding of economics, found fairly simple and easy to comprehend. It’s known as the Robin Hood Tax and since the launch of its campaign in the UK, a couple of weeks ago; it has accumulated a wide range of criticism and appraisal.
For those who do not know; The Robin Hood Tax, named after the Nobel Prize-winning economist James Tobin, who first concocted the so-called “Tobin Tax”, is a celebrity-backed campaign bringing together dozens of organizations that work to reduce poverty in the UK and overseas. James Tobin’s original ‘tax’ was designed to discourage risky currency trading and potentially assist developing nations. As such, the campaigners came together during the economic crisis to campaign for a new deal between banks and societies. It already has internationally recognized NGOs supporting its cause such as Actionaid, ATC Fourth World, CAFOD, Comic Relief, Oxfam, Greenpeace and many more. It proposes a tax of 0.05% on speculative banking transactions. In the UK alone, it has been estimated to be capable of raising hundreds of billions of pounds per annum. According to a BBC reporter, the amount could be as high as 400 billion GBP a year. Now how will this money be spent? The campaign calls for countries that levy the tax to keep half the proceeds domestically and for the rest to be split 50-50 between poverty reduction and tackling climate change.
Now, as we have all been hearing the past few weeks, Greece is about to hit a sky high debt average of 290 billion euro. Any plans to borrow or be given money from the EU come with a bundle of severe conditions and any measures taken internally have provoked concern from Greek trade unions and public opinion, even though everyone understands very well that tough measures have to be accepted by all to get us out of the current situation.
This therefore led me to think, that if applied in a familiar scheme, Greece could draw from the Robin Hood Tax, and keep 50 % to reduce its public deficit and split the rest (25% and 25%) for assisting public health and environmental protection. Could it not?
In my last bank statement, I noticed that my bank charges me 17% on each shopping transaction! It seems only logical to me, that financial institutions can afford a humble 0.05 percent tax amongst their own financial transactions. Especially, if those 5 cents of every 100 euros invested or spent goes for a good cause!
Can this economic crisis be turned into an unprecedented opportunity to take the lead, and take a risk no other EU Member State has yet taken? US President Barrack Obama recently announced his plans for an ‘insurance levy’ on banks that he hopes will raise approximately $90 billion over the next decade to help the US mitigate from its financial crisis. However, as far as I know, no EU Member State has moved to tax its banks up to now. The subject of a bank tax is merely on the agenda of an informal meeting of the EU finance ministers in April. Austria is the only country that must be given credit. On February 22, 2010, Chancellor Werner Faymann announced his plan to “introduce a bank levy” of approximately 0.7-1.0 percent tax on banks, by 2011, similar to the United States scheme. (EUbusiness.com)
Economically, Greece has undoubtedly hit rock bottom, if not entirely, at least substantially. For whatever reasons this has come about, it is time to look forward rather than backwards. If history has taught us anything, other than the usual ‘non-repeatable’ mistakes principal, it is that high risks bring about high rewards. Thus, the present situation in Greece could be viewed from two angles; from a pessimistic view it’s a catastrophe that will take years to succumb, but from an optimistic eye it’s a critical junction that bears an opportunity. As the Chinese believe, the word ‘crisis’ is composed of two characters that represent “danger” and “opportunity”. At a time where Prime Minister Papandreou and Minister of Finance Papaconstantinou are trying vigorously to find alternative and necessary fiscal measures to minimize Greece’s deficit, by raising taxes fuel, freezing civil servant salaries, cutting bonuses and increasing the average retirement age by two years; the question is not whether these are the correct measures but rather are they the only measures?
What if they consider bringing the Robin Hood Tax to Greece?