Now That Europe’s Got A Robin Hood Tax Let’s Not Have One
THE Robin Hood Tax people are all ever so excited. Half the countries over in the eurozone have now been given permission to have one and it looks like France will get one around the end of 2014. The argument is thus that because they’re all getting such a lovely financial transactions tax therefore we should immediately run off and do the same thing.
However, the correct argument would be, well, seeing as they’re doing this experiemtn why don’t we wait and see what the results are? You know, just check that all hte claims being made about such a tax are in fact correct?
Most of the claims being bandied about will be very hard to check. For example, opponents of the tax, like me, point to the EU’s own report which says that it will shrink the economy from where it would otherwise have been. A bit difficult to prove that: there’s no way of showing that the French economy in 2020 would have been €2 trillion instead of the €1.95 trillion it actually is without the tax.
Similarly, it’s very difficult to point to the taxes that aren’t collected because the economy is smaller. We’ll all see the revenue marked “Robin Hood Tax” but not that that isn’t coming in from corporation tax, VAT and the rest.
However, there is one claim made by the RHT peeps. In fact, it’s part of the justification for the tax itself. They say that excessive trading leads to price volatility. Price volatility is bad and that’s why we need to have the tax in order to reduce trading and thus price volatility.
OK. So, let’s come back in 2019 or so shall we? After France has had 5 years of this lovely tax. And let’s measure price volatility in the countries that had the tax for 5 years against price volatility in countries that didn’t. And let’s see whether this claim is correct: does the tax reduce price volatility?
The thing is, all the economic theory on this (which has all been ignored by hte campaigners of course) tells us that the tax will increase price volatility. So we do have two pretty serious claims here. One that the tax will reduce something we can easily measure, the other that it will increase it.
So, let’s wait and measure. And see who is actually right before jumping in ourselves, eh?