News Column

Comment: Bankers can be heroes too - all it takes is one easy step: A tax on the transactions of banks and hedge funds could transform not just this country, but the entire world

February 20, 2014

Bill Nighy

Like most people I sometimes feel that we live in a world where the absurd and the cruel are not only accepted but barely remarked upon. At a time when, as a result of the recent banking catastrophe, people all over the world are suffering the longest squeeze on living standards since before the second world war, when record numbers rely on food banks to survive, the financial sector is handing out billions in bonuses as though the economic crisis never happened.

This year the total bonus pool since the 2008 crash will break through the pounds 80bn barrier - around three and a half times the amount banks have paid in corporation tax and the bank levy. That's about pounds 1,250 for every man woman and child in the UK.

These figures are alarming. Not because I have anything against bankers - who I am sure are no more or less agreeable than actors or biochemists - but because of the injustice that lies behind them. Having been bailed out to the tune of several trillion dollars worldwide, the current situation where huge sums of money remain untaxed is bewildering. It seems to me a fundamental question of fairness that all elements of society should be equally responsible for the protection of hospitals and the less advantaged everywhere.

Fortunately, there is a simple way to ensure this happens - a tiny tax on share, bond and derivative transactions carried out by banks and hedge funds known as a financial transaction tax or Robin Hood tax.

Eleven European countries - including Germany, France, Italy and Spain - are currently negotiating such a tax, with the latest round of talks taking place this week. The UK government not only opposes such suggestions but is going to the European court of justice to ensure the City of London is exempt.

By doing so it would be turning down, in Britain alone, the opportunity to raise up to pounds 20bn a year that would be generated by this tiny tax on speculative banking. The Robin Hood tax, though a snappy title, slightly misdescribes the concept. The idea is not to rob anyone; nor to punish. It is simply to redress an imbalance.

The huge amounts of money that would be generated by such a tax could be distributed at each country's discretion, but the suggestion is that 50% of it should be used for domestic issues, such as the fact that 3.5 million children who live beneath the poverty line in the UK; 25% towards climate change; and 25% for people in the developing world.

Back in 2010, when the Robin Hood tax campaign was launched, Richard Curtis and I made a short film in which I appeared as a banker struggling and failing to find reasons to oppose the tax. We have now made the sequel, Future News. The film imagines what the situation might be like 10 years from now.

The campaign has come a long way since then. Polls have shown that a transaction tax has widespread support across the UK and Europe. France and Italy have introduced their own limited taxes, with France earmarking millions for the fight against HIV and Aids.

A European tax could play a major part in helping other countries emulate the UK by finally delivering on their UN aid promises to the world's poorest.

Success in Europe is not yet assured. This week's discussions kick off a crucial period leading up to the European elections in May. Despite backing from the German government for a tax that will be difficult to dodge and include derivatives, as well as stocks and bonds, the financial sector is fighting a rearguard action to water down the proposals.

Winning the argument on derivatives will be crucial - they will account for more than half of the estimated euros 34bn revenue, and exempting them would make it much easier to dodge the tax. With a successful transaction tax, it would be far harder for vested interests to claim that a tax that is less than many of the fees they charge would somehow wreak terrible economic damage.

While this government is likely to remain implacably opposed, it is worth remembering that the Lib Dems backed such a tax in their last manifesto. As for Labour, if Ed Miliband is serious about his producers versus predators rhetoric, then he will need to bring our out-of-control financial sector to heel.

If the PM wants to do this without risking a Eurosceptic backlash then he could always extend the UK's own mini-transaction tax, stamp duty on shares to cover derivatives and bonds. Even a small portion of the revenue could make a difference to the hundreds of thousands of people struggling to make ends meet. It could help to reverse cuts to public services and protect people from Berkshire to Bangladesh against the extreme weather the climate is bringing.

The tax could also do something remarkable and transform the banking community from being villains to being popular. I know there are a long line of salaried experts who are philosophically opposed to the idea of aid who will declare me a well-meaning but profoundly mistaken amateur, or, I quote, "just another celebrity seeking publicity" (something I obviously need).

It is true I haven't suddenly become an expert on international affairs or economics, but I am briefed by expert observers whom I trust. The reason this idea won't go away is because it is such a brilliant and simple way of ensuring money goes to those who need it most.

Bill Nighy is an actor and campaigner for a tax on financial transactions

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Source: Guardian (UK)

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