Friends of the Earth Europe believes that the financial sector should pay its fair share of the cost of financial crises to the public and the economy. A financial transaction tax would help raise revenue to tackle the global challenges of poverty and climate change. Also known as the 'Robin Hood Tax' – after the English folklore hero who stole from the rich to give to the poor – it would be a small change for the banks that would make a big difference for the world.
A tax of only 0.05% on financial transactions could raise around $400 billion, straight from the pockets of the bankers who got rich crashing our economy. This can be used to stop domestic cuts to social services and to help the people who are suffering most from climate change, but did least to cause it.
The financial transaction tax would cover transactions involving stocks, bonds, foreign exchange, and derivatives (including the trading of futures and options related to stocks, interest rate securities, currencies and commodities). It would cover all transactions traded on exchanges as well as 'over the counter' (OTC) transactions. However, it would be limited to transactions between financial market actors, so ordinary people would not be affected. Transactions such as payments for goods, paychecks or cross-border remittances would not be subject to it. Neither would short-term inter-bank lending or central bank operations.
Stabilising the economy
The tax could also be designed to prevent high speed trading – financial transactions done at high speed (up to milliseconds), automatically, by computers – which would help to stabilise the economy. Even if an international agreement on a financial transaction tax cannot be secured quickly, it can nonetheless be introduced swiftly at European-level, helping to stop cuts to our crucial public services right away.
The challenges we face today, from slashing our carbon emissions and developing renewable energy capacities to ending poverty at home and abroad, all require large amounts of finance. There are many ways we could raise these funds – cut vital public services, raise taxes despite growing unemployment or... tax a banker.
Friends of the Earth Europe campaigns to make this piece of common sense into common practice. Support for the financial transaction tax comes from all sorts of places, from heads of state like Angela Merkel and Nicolas Sarkozy, to business bigwigs like Warren Buffet and George Soros, alongside hundreds of economists. It has the advantage of being a simple and practical idea that transcends party politics. Friends of the Earth Europe believes that the Robin Hood Tax should, and, with your support, could, become a reality.