Wednesday, 2 November 2011

Why the Robin Hood Tax is Nonsense

So, I see that the Archbishop of Canterbury agrees with the idea of a 'Robin Hood Tax' on inter-bank financial transactions. He argues that it would be one way of advancing the 'moral agenda' of the #OccupyLSX crowd outside St. Paul's Cathedral.

Dr Rowan Williams, Archbishop of Canterbury

In theory, this 'Robin Hood Tax' sounds like a good idea. A small tax on large transactions resulting in large revenue for the Government to plough into good causes. However, the Archbishop is incorrect, for the following reasons:
  1. We now have a global economy, where different nations (and by association, tax regimes) have to compete with each other in order to secure the residency of big companies which generate tax revenues. If we introduced such a tax without it being on a global scale, many larger, more flighty banks would probably decide to re-locate their Headquarters to somewhere without such a transaction tax. Zurich, New York and Hong Kong immediately spring to mind. Increasing taxes in this way could actually reduce, not increase revenue;
  2. Even if the levying of such a tax were to be successful and not result in any capital or commercial flight from the country to competitor tax regimes, surely the supporters of this idea (the good Archbishop included) are not so naive as to think that the cost of it will not simply be passed on to customers? A company's only loyalty is to it's shareholders, and they will not accept to reduction in profits. The people who will end up paying this tax are people with current accounts, savings and mortgages;
  3. Off on a slight tangent, why is it called a 'Robin Hood Tax'? Ah, because it takes from the rich and gives to the poor. But, it actually doesn't, does it? It takes from the poor (by proxy) and gives it to the Government. Robin Hood did not advocate taxes - indeed, he was defined by his campaign against the Sheriff of Nottingham's punitive taxation regime, taking the revenue and giving it back to the people who raised it in the first place. Robin Hood was an anti-tax advocate;
  4. Why is paying a tax 'moral'? What is moral about the Government taking money off people under threat of violence, and how does kow-towing to such extortion make it righteous or good? Did Jesus advocate that money be ploughed into Government to account for our moral shortfall? No. Charity is only charity if it is freely given. Tax is taken under threat of violence, and therefore any nobility in handing the money over is lost;
  5. And finally, who is the Government to decide what is or is not a 'good cause'? While I do not discount their worth to some people, I do not actually want to give money to some charities. I do not personally value the work they do, ergo I fail to see why I should fund them. Some charities, of course, I do value, and I give generously to them. But that is my choice, as it should be. Money given to charities by the Government is not my choice. But it is my money.

Levying yet another tax to feed the ever-hungry State which will actually reduce revenues by driving business abroad and will ultimately be borne by consumers rather than corporations is not a solution to our problems.