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USA accused of obstructing plans for Robin Hood Tax

By Ed King

The US State Department has been accused of spreading misinformation about plans for a financial transaction tax (FTT) that could raise $350 billion a year to address climate change.

In a letter to Secretary of State Hillary Clinton, 63 US organisations have complained about comments made by US negotiators during the a UN climate finance workshop held in Bonn earlier this year.

The current US administration has signalled it could be open to a Robin Hood Tax - but is concerned it could deter investors

The letter alleges US officials dismissed the FTT, also known as a Robin Hood Tax, as being “impossible to impose” and claimed it would “erode” domestic tax bases by encouraging offshore banking.

The signatories – who include Oxfam America, Friends of the Earth US and Action Aid USA, argue the State Department comments were misleading, as a FTT does not have to be global to work, nor would it automatically drive out financial activity.

They call on the State Department to adopt a more positive attitude to the tax at the second climate finance workshop, which starts on Monday in Cape Town, South Africa.

“While we work very hard to move our own country in a fairer, more just and more ecologically-sound direction, we would ask that you not discourage other countries from supporting this tax as one equitable solution to address the climate crisis, cuts to public services, and widespread job loss faced by their populations.

“Indeed, we urge you to support efforts to enact a financial transaction tax to pay for international public goods at climate change negotiations, the G20 and other important international venues.”

Backers of the Robin Hood Tax say it could raise $350 billion per year in the USA, and £20 billion in the UK. France and South Korea have recently introduced new taxes on financial transactions.

Last week an FTT Bill was introduced into Congress by Democrat Representative Keith Ellison, calling for a 0.5% tax on the trading of stocks, 50 cents on every $100 of trades, and lesser rates on trading in bonds, derivatives and currencies.

At the 2010 Cancun UN climate summit parties agreed to raise $100 billion each year by 2020 to help developing countries deal with climate change – although it is still unclear where this money will come from.

Climate finance will be high on the agenda at COP18 in Doha. Developed countries facing fiscal and economic constraints will be looking for a political signal from developed countries that finance will continue to flow at least at current levels and will be ramped-up over time towards that 2020 goal.

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  • Tom Davis

    The proposed Financial Transactions Tax (“FTT” aka “Tobin Tax” aka “Robin Hood Tax”) is not a tax on Wall Street – It’s a tax on Main Street.

    • The Secretary General of the European Federation for Retirement Provision says the FTT is not a tax on Wall Street, but rather a tax on retirement savings and other “innocent bystanders.”

    • A study by the Dutch Central Bank showed that over 40% of the FTT would be paid by pensions and retirement savings

    • James Tobin’s co-author, Berkeley Professor Barry Eichengreen, says the Tobin tax is the “wrong tool” to raise revenues.

    • A study by the World Bank concluded that “… neither the tax revenues nor the efficiency gains hoped for… are likely to materialize.”

    • The IMF showed that the best way to hold banks responsible is to tax them directly because the FTT tax burden would “fall largely on final consumers,” not the financial sector.

    • Archbishop Desmond Tutu once supported the FTT, but now opposes it.

    To learn why a diverse group of people from many different backgrounds opposes the FTT, please read “Straight talk about the FTT” at: http://www.financialtransactiontaxes.com . (Includes over 40 references from experts around the world)

  • Janine

    I agree with T Davis above. It’s a highly toxic tax, obviously not sufficiently understood by those who have been persuaded to support it.

    I thought the website quoted above (financialtransactiontaxes.com) clarifies in layman’s language many of the reasons why it has been rejected by the vast majority of economically prudent countries.