Tobin or Robin

Dr Claire Melamed's picture
Dr Claire Melamed Head of Policy Coordination

While I'm on here explaining the wonkish details of the Robin oHood Tax, I'll answer another question that's had some of you scratching your heads today: is the Robin Hood tax is the same thing as the Tobin Tax which people have been campaigning for since the 1970?

The FTT is certainly pretty close to the Tobin tax - but like financial markets themselves, the idea has grown in the 40 years since James Tobin first proposed it.  Tobin's idea was just to tax currency trades.  At that time, all the other things that financial markets trade now, like derivatives and bonds, swaps and futures, were just a gleam in Goldman Sachs' eye.  But now, of course, they dominate the market.  So Tobin's original idea has been extended to those products too, to reflect the realities of how markets work today. 

As the market has got more complicated, so the ways of taxing it have too.  The main difference is that while Tobin proposed just one tax rate for everything traded on the market, the Robin Hood Tax proposal is that different bits of the financial market might be taxed at different rates, to reflect the profitability of trades in those markets.  If a tax were introduced, the markets would have to be monitored carefully until the 'right' tax rate for each market was found - one which raises money without killing off the market. 

The Robin Hood tax - the hard facts

Dr Claire Melamed's picture
Dr Claire Melamed Head of Policy Coordination

So after all the excitement of yesterday's launch of the Robin Hood Tax campaign, time for a hard look at the facts. 

One of the things we kept getting asked yesterday was how this tax might affect ordinary people - will it mean money being taken off all of our bank accounts or pension funds, for example?  The short answer is that it won't.  The science bit is that it's possible to design a tax which is paid mainly by the banks themselves, by only taxing what's called the 'wholesale' banking sector.  This isn't the banking that goes on on the high street, but the banking that involves the huge sums of money that wash around the world every day. 

The economics boffins who we've been talking too for months now have looked at what happens when costs and prices change in the wholesale market, and found that they aren't passed on to us who bank with 'retail' banks.  So we know that if we introduce a new cost on wholesale banking - which is what a Robin Hood tax would be - it wouldn't get passed on to the rest of us.  There's actually a bill being discussed in the US House of Representatives at the moment which is designed to tax the big traders but exempts ordinary people - this shows how it might be done in other countries too.

Because this is tax paid on every transaction, the more you trade the more you pay.   So the financial institutions who trade the most - the speculative dealers who have made the money markets into a casino - will pay the most.  And it might have the added benefit of encouraging funds who are trading with our money - like pension funds, for example - to trade less, and hold longer term and more secure investments.  This might help them to fill some of the gaping holes in pension funds that have opened up as fund managers have tried to play the markets and have lost.

The Sherrif of Nottingham fights back!

Jenny Ricks's picture
Jenny Ricks Head of Campaigns

With the Robin Hood Tax campaign well and truly launched today, the first barrage of arrows have come our way. It’s partly a sign of success – blanket media coverage combined with a massive online presence (we’re today’s top UK trending topic on Twitter for example) has meant plenty of bloggers and commentators want to have their say!

Given that the stakes are high, it’s inevitable that a few people won’t like what we’re saying, or they feel threatened by the prospect of a Robin Hood Tax. Luckily, Robin Hood has been on hand all day to answer comments and questions on the website like, wouldn’t the entire City of London move overseas? What effect would it have on global financial markets? Won’t the banks just pass on the cost to me? Or, nice idea you load of idealists, but it’s been around since the 70s, so it won’t happen. The comments here give a pretty good idea of the tone of the debate.

There’s also been some wicked plotting, worthy of the  Sherrif of Nottingham himself (this one, obviously, not Keith Allen's feeble version) on a few online polls today – the one on the Robin Hood Tax homepage had a stream of ‘no’ votes all coming from the same IP address... not fighting fair!

The basic answer to today is that our campaign has to overcome people’s cynicism that this tax is possible – not only that, it’s morally the right thing to do and it’s financially sound.

Get involved and let us know what you think. We need your voice.

Robin Hood Tax to the rescue

Jenny Ricks's picture
Jenny Ricks Head of Campaigns

After a frenzied few weeks of preparation, the Robin Hood Tax Campaign kicked off officially this morning. Pulling together the campaign has been hectic, but a lot of fun. It’s launched at the exact right time - there’s such a great opportunity to demand fairness out of the financial crisis for the people in developing countries, and here in the UK, dealing with the sharp end of a mess they didn’t create. I’m excited. And so's Bill Nighy...

These issues aren’t new to ActionAiders. When the financial crisis hit last year, hundreds of you leapt into action to join us at the Put People First Rally ahead of the G20 summit in London. Our tax justice campaign has since been on the case, tackling the ludicrousness of tax havens that siphon $160bn a year from developing countries. We made a major breakthrough recently. Thanks for all your amazing support so far.

Now we need you to take the next step with us. We’ve teamed up in this coalition with over 50 development, environment and UK groups to demand the Robin Hood Tax. It’s a tiny tax on banker’s transactions that could raise about £250 billion per year to help protect vital public services and jobs here in the UK, plus tackle international poverty and climate change. £19.2 billion per year of that would halve hunger by 2015. What’s not to like?

We’ll have a tough fight on our hands to make sure the political parties all get on board with our tax demands. It’s really up to you whether the politicians listen or not. It’s your voice they’re listening to.

We’ll be back in touch soon to make tax justice the talk of the town with all the parliamentary candidates. In the meantime, you can join Robin Hood’s band of merry (wo)men and be part of the world’s greatest bank job!

Why are we talking about biofuels?

Meredith Alexander's picture
Meredith Alexander Head of Trade and Corporates

The decision to launch a campaign should never be taken lightly. 18 months ago, ActionAid held a global meeting to talk about the next phase of our HungerFREE campaign. People argued passionately about the importance of sustainable agriculture for increasing food production while responding to the threat of climate change (you can see our report here. People wanted to tackle the lack of investment in smallholder farming from countries rich and poor alike. Everyone acknowledged that women farmers should be getting much more support.

Then people started mentioning a new threat to our efforts to end hunger. Corn and wheat prices had shot up at the same time as huge amounts of American grain had been diverted from the food chain. Farmers in a number of countries were being forced off their land because companies wanted to grow sugarcane to make ethanol. Jatropha, a toxic plant, was growing on lands that used to produce food. Everyone agreed that biofuels sounded dangerous for the poor, but we needed to know more.

That meeting intensified ActionAid's biofuel research programme worldwide. From Guatemala to Ghana and from Italy to India, our efforts have been directed at understanding the positive and negative aspects of biofuels. Here's what we learned:

1)    Biofuels cause hunger now: using crops to fuel cars instead of feed people pushes up prices, forcing more people into hunger.

2)    Biofuels will make hunger worse in the future: rich countries are investing in biofuels to help stop climate change, but many biofuels cause more greenhouse gas emissions than fossil fuels.3)    Biofuels are often a bad deal for the people who grow them: I met lots of small scale farmers growing jatropha in India, but none of them were getting a decent income.4)    Biofuels can be stopped: demand for biofuels in countries like the UK is driven by government regulation. If we all work together, we can change those laws!

That’s why I am demanding zero meals per gallon. What about you? You can join the campaign or if you aren't quite convinced, come to the Big Biofuel Debate to find out more.

Shell's 12 billion for Biofuels

Meredith Alexander's picture
Meredith Alexander Head of Trade and Corporates

We’ve been alarmed to discover that Shell are investing $12 billion in the Brazilian sugarcane ethanol industry.

They have invested with Cosan, the most powerful brazilian bioethanol producer, who have been accused by the Brazilian government of ‘slave labour’ practices. This investment makes Shell the largest biofuel producer out of the major oil companies and undoubtedly also means Shell will start lobbying for even more support for the biofuel industry - including the reduction of tariffs on biofuel imports in the US.  Further incentivising of biofuel imports will almost certainly lead to small-scale farmers in southern countries losing more land as foreign companies grab it to grow more biofuel.

We sent this letter to The Times in response to the news:

Sir, Shell's promise over a river of green fuel flowing from its sugar cane venture with Brazilian company Cosan must be treated with great caution. Biofuels may be touted as a solution to climate change in the transport sector but this argument hinges on whether a specific biofuel saves greenhouse gas emissions when compared to the fossil fuels they are replacing. This is far from certain.

Growing more sugar cane for cars needs more land, which can result in releasing more greenhouse gasses than can be saved by switching to ethanol. Even where new sugarcane plantations are grown on land away from tropical forests as is being claimed by Shell, it often displaces other agricultural activities into carbon rich habitats such as forests. It doesn’t matter if such habitats are destroyed to grow the sugar itself or to accommodate cattle or soybeans that have been pushed out by sugar. The result is the same and is called indirect land use change.

Measuring the impact of land use change is critical if the greenhouse gas emissions from all biofuels are to be correctly assessed. Get it wrong, and money invested into biofuels is money wasted. Greenhouse gas emissions will continue to rise and the impacts of climate change will fall disproportionately on poor people in developing countries with whom ActionAid works.