small group of people including myself have been banging away for years at the idea of a small tax on currency speculation to raise revenues and curb the huge scope of this often sinful trade.
I confess that I never envisaged that it would attract enough support to hit the tipping point in the short-term that acorns like this take time to mature into oak trees. So I was completely amazed to read in the summer that an eminently respectable figure like Adair Turner could turn to Tobin as part of an effort to target socially useless activities by banks. I was even more gobsmacked when the Prime Minister embraced the notion in the Autumn. It wasn't that long ago that I'd been part of a delegation to a junior Treasury minister who didn't entirely dismiss the idea but evinced deep scepticism about its feasibility.
I have been even more amazed that our moderate, modest and finessed proposal to tax just one form of financial transaction and raise about $30 billion worldwide has been replaced by a wider tax on all transactions which could raise hundreds of billions every year. This assumes a reduction in such trades and may, therefore, under-estimate the potential revenues that could be raised with relative ease, if the political will to do so is there. I'd been too timid but the times, they are a changing.
The growing support for making the banks pay a fairer share has been sparked by their role in the global recession and Tobin plus has begun to make its way through the international financial decision-making process. It's also popular with 53% supporting and just 28% opposed in a recent YouGov poll. This isn't surprising given that UK taxpayers must stump up £1.5 trillion to clear up the mess made by the masters of the universe.
In these circumstances, it is seen as fair to ask why should themany suffer swingeing spending cuts and/or tax increases to pay for a few bankers' mistakes without their changing their tune - from the bonus culture to a transaction levy? 'we are all in this together,' as George Osborne said, why don'tthe fat cats cough up their share?
Brown's surprise support at the recent G20 summit in St Andrews for a global levy and other measures is a good response to this new public mood. The labour movement should back Brown when he says that "it cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us." The PM is on the money in demanding "a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards." Gordon Brown has gone out on a limb and received some flak but could yet win the fight if he and others build international alliances and win public support, including parts of the City as well as unions and experts. America is a key battleground.
Avinash Persaud, chairman of Intelligent Capital and a former banker, argues that: 'Financial transaction taxes are not only commonplace, but have become easier to enforce.' Persaud adds ' Where there is a will, there is a way.' The traditional objection is that it requires an international regime to minimise evasion. But the trillion dollar a day trade is recorded electronically which makes it easier to track and tax transactions in the same way as tax havens are being tackled. Supporters of Tobin plus now have a golden opportunity to build on the momentum behind this obvious measure of fairness to overcome the deeply damaging power of the banks and brokers. It could become a social democratic source of finance for public goods and once established would be difficult to reverse. It is like the national minimum wage in this respect.
A campaign involving the TUC and development groups has been established. It plumps for a financial transaction set at a low level which could reduce needless and often damaging transactions and raise several hundred billion dollars annually. The proceeds could be split 50-50 between domestic and international goods such as tackling poverty at home and abroad as well as addressing climate change. Gordon Brown's suggested sin tax doesn't undermine capitalism or globalisation (which is why some on the left object to its tinkering, albeit one that pays huge dividends) but it can help civilise the wilder excesses of global finance and raise billions for good causes. My own hope is that it will also win votes for Labour although it is a measure that needs to be implemented whichever party is in power.