The emergency budget is to be on June 22 and David Cameron has already begun to try and soften the ground. The pain, he states, will be felt by everyone. This is worrying and could be avoided by the introduction of the Robin Hood Tax, says the ippr.
One of the ways of raising much needed funds is through taxation. Liberal Democrats campaigned on a platform to raise employee contributions to national insurance. Conservatives, on the other hand, favour raising VAT to as high as 20%, which would be regressive.
Taxing corporations is another means of raising funds, however, it has several drawbacks, including passing the cost on to its consumers, cutting labour costs and leaving the UK. Nor would its reach be felt meaningfully beyond our shores. Many feel that the financial sector should be taxed to a greater extent given that they have caused the recession.
The most effective way to tax the financial sector is through a Robin Hood tax.
Such a tax would help ease the effects of the recession in the UK and across the globe, as half would be dedicated to international development.
Who would be most affected by this tax? Clearly, it would be those who make frequent trades, namely investment banks and hedge funds in the developed world. Such a tax could recognise that the effects of capital flows are felt (both positively and negatively) across the globe, and most keenly in the developing world. Pension funds and insurance companies, would also be affected but, they tend to trade less frequently and thus would pay a smaller proportion.
Bob Neil MP revealed in the House of Commons June 10th that the poorest will face the largest burden of paying down the debt. This is in direct contrast to Cameron’s promises to protect the poor. A tax on financial transactions would raise approximately £25 billion; more than twice the amount that could be raised from increasing VAT to 20%. It is not just the less well off at home who would suffer from the suspected Tory plans, but millions overseas who will be deprived of financial support that they so desperately need.
By Margaret Dantas Araujo