Labour desperately struggle to save face over Tobin tax
Dear Alistair Darling,
After Gordon Brown was humiliated on the international stage over his unexpected proposal for a so-called Tobin tax on the financial sector, it falls to you to try and convince us that everyone still loves his idea. Unfortunately, as with every announcement on cracking down on tax havens, rogue bankers, greed, excessive bonuses and just about everything else that we’ve heard in the past two years, it will take you months to reach any sort of agreement – and that agreement will ultimately achieve nothing.
Today you have pledged to step up the fight for a new international tax on banking despite an initially frosty response from Washington. You claim that there is ‘broad agreement’ among Britain’s partners in the G20 that it was worth exploring new curbs on global finance, and said that remarks from Timothy Geithner, the US treasury secretary, that the US would not back a “day-to-day financial transaction tax” did not mean the Obama administration was ruling out any form of global financial sector charge. Indeed, Downing Street sources said the Prime Minister’s opponents had failed to grasp how the political mood had been transformed by the financial crisis and indicated the focus on the Tobin tax had obscured the extent of international agreement on the need to ensure the financial sector contributes more to insure against the costs of banks failing. Apparently, Brown accepts that there is no consensus yet about what should be done, with the Americans more interested in imposing some form of compulsory insurance on the banks and Europeans more sympathetic to some form of Tobin-style taxation. However, you insist that consensus is possible and suggested that Geithner was in “broad agreement” with the general principle on a banking tax. “He is very clear that institutions rather than individuals should bear the cost of this.”
You don’t know when to quit, do you. It wasn’t just Timothy Geithner who crapped on your famous doorstep. As well as Geithner’s discouraging response, Dominique Strauss-Khan, the head of the IMF, said he thought such a measure was unlikely to be adopted and Jim Flaherty, Canada’s finance minister, said his government was interested in lowering taxes, not raising them. In addition, you have been forced to deny that this was a pre-election stunt as well as facing accusations that the Tobin tax itself is completely unworkable. While it is true that the IMF recently commissioned a feasibility study into a global banking tax, no country is going to sacrifice its economic recovery to save Labour’s faltering credibility. The only reason that Brown floated the idea is that he knows full well he will never see it come into force and can use it as an election tool to attack the Conservatives for ‘not doing enough’ or ‘making the wrong call’ or some other nonsense along those lines. The best that Downing Street could muster was that there was still ’some prospect’ of Brown’s plan being implemented. Yer, right. Not only is the plan destined to fail, I find it tragic yet strangely amusing that you and Geithner are demanding that institutions rather than individuals pick up the tab for any new insurance or tax, seeing as the costs of such a scheme will be passed onto the public rather than being allowed to hit profits. Duh.
You and I both know that Brown is not interested in financial reform. Every promise and every international conference on the banking crisis has produced nothing more than hollow commitments, vacuous plans and political posturing. Today is no different. If Brown was serious about a Tobin tax, why has he waited until now to support it when other lunatic lefties have been championing such a move for years? It’s all just a political mindgame to him, as he desperately struggles to save face and outshine the Conservatives.
Yours sincerely,
A.Tory
Witanagemot Blogs
“It’s all just a political mindgame to him, as he desperately struggles to save face and outshine the Conservatives.”
And he risks being outflanked by Alan ‘Postman Pat’ Johnson, who in an interview in the ‘Indy’ this morning sets out his stall by promising to tackle immigration.
And by ‘tackle’ I mean ‘attempt to convince everyone they are wrong and he’s right’…
Johnson knows his currency is dwindling so, like Ed Miliband this morning, they are starting to carve their own niche and distance themselves from Brown – largely because neither of them have any achievements to speak of at the moment.
Watching this Labour Government is akin to watching a dragonfly drowning in the bath. It thrashes around in desperation trying to reach dry ground, but everything it does sinks it further.
However, the Left in Europe has gained a certain level of traction from the financial crisis, not least in being able to bully the the smaller countries such as Ireland into things they definately didn’t want. They now have the ability to impliment a Tobin style tax across the EU, which is what they wanted. The power to be able to impliment socialist and undemocratic laws without reference to the individual governments.
Tony, you cannot have just an EU Tobin tax, it has to be worldwide on every transaction or it just doesn’t work. You can’t have US banks not paying a tax while EU banks get stung. That is the biggest stumbling block because it requires every single country to agree to it.
Brown’s critical (electoral) imperative is to persuade the public that the crisis and the recession was caused by greedy bankers rather than his own incompetence. He presented this proposal as a “solution” to the “problem” of….of….well, making the banks pay. For something. He’s not sure what.
It was the fiscal, monetary and regulatory stupidity and incompetence of governments, including Brown’s, that caused the financial crisis, not bankers.
@Tony E – “Watching this Labour Government is akin to watching a dragonfly drowning in the bath. It thrashes around in desperation trying to reach dry ground, but everything it does sinks it further.”
Not really. I’d feel sympathy for the dragonfly, and help it out of the bath…
The ‘Tobin tax’ reference was maybe a bad example, and used because it featured in your letter. What I was trying to draw attention to is the powers that they have granted themselves to do just about anything they want at EU level, however stupid or undemocratic, and that they have used this economic crisis to help force the hand of the net recipients of EU cash.
Adam, I know that and you know that, but Brown will keep repeating the lie until he and his Labour core vote believe it.
Julia, I’d pull the plug if I saw Labour struggling, personally speaking. Sympathy is in short supply.
Tony, I very much doubt Sarkozy et al will miss the opportunity to hit the financial sector as hard as they can, knowing how much it means to the UK.
You might like to add as a PS that whether or not a Tobin Tax would drive business offshore is not a matter for theoretical debate.
The UK is one of the few countries to still haev a kind of Tobin Tax, being Stamp Duty of 0.5% on sales of shares in UK companies or redemptions of units in unit trusts. This is why, over recent years, many collective investment schemes, even those based on UK shares or assets, are run from Dublin or The Netherlands (who got rid of their own Stamp Duty a couple of years ago).
It has been calculated that scrapping the tax (which raises about £4 billion a year, I think) would be at worst revenue-neutral because there would be more people doing the paper-shuffling in London (and paying more PAYE, corporation tax etc).
PPS Yet again, this illustratates that there is little point trying to tax things that are internationally mobile or with elastic supply curves. Far better to tax things which are immobile and with fixed supply, such as actual or imputed income from land and buildings in the UK and monopolies like airport landing slots, radio spectrum etc.
Oh tell you what, let’s tax oxygen. Everybody needs it and would glady pay for it in return for, uhm, living. And you could create an ancillary market in the small swipe-card payment meters we can install in peoples throats to
choke them to deathrestrict their access to unpaid for national resources as appropriate. No worries about the poor – we can, as with water, set these to allow a subsistence level of o2 through to you which would leave you alive (but unconscious).For any sh*t-headed labour shills reading this, I am JOKING and in no way encouraging you pukes to charge us for what is freely ours already, as animals walking around on the face of the planet.
Mark, be careful what you wish for. Harman was on the front page of the Guardian this morning for her plans to introduce new ‘wealth taxes’ including the expansion of council tax bands to grab more revenue for the government. Easy target if you ask me.
Shaun, take a deep breath. Then count to ten. Then have a stiff drink. Then lie down.
Apologies LFAT, but the future looks decidedly illiberal…