THE ROBIN HOOD TAX. FAQs. robinhoodtax.org.uk

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1 THE ROBIN HOOD TAX FAQs robinhoodtax.org.uk

2 ROBIN HOOD TAX FAQs 2 CONTENTS The Big Idea 3 What is the Robin Hood Tax? 4 Financial Transaction Taxes 4 Why do we need the Robin Hood Tax? How would the money be spent? 5 Here's why we need a Robin Hood Tax 5 At home 5 Abroad 6 Climate change 7 Why should the financial sector be taxed? 9 Doesn t the financial sector make an important contribution to our economy? 10 Can this work without global agreement? 11 Where would the revenue from a Financial Transaction tax go? 11 How should Financial Transaction Tax revenue be spent? 11 Won t companies just avoid the tax or move their businesses offshore? 12 Will ordinary people like you and me end up paying the tax? 13 Would a Financial Transaction Tax hit our pension funds? 14 How would a Financial Transaction Tax affect our economy and jobs? 14

3 ROBIN HOOD TAX FAQs 3 THE BIG IDEA The idea behind the Robin Hood Tax is simple: the financial sector has caused the greatest recession in a generation, affecting millions of people here in the UK and around the world. It must now pay its fair share of the cost of sorting out the mess it created. The Robin Hood Tax campaign is calling on the UK government to raise an additional 20 billion a year from the banking industry - much needed revenue that could fight poverty in the UK and overseas. It could help tackle climate change. Help protect schools and hospitals. Help stop massive cuts across the public sector. Help build new lives around the world. The tax is just. The financial sector can afford it. Systems are in place to collect it. Many countries are already implementing it. So, what are we waiting for?

4 ROBIN HOOD TAX FAQs 4 WHAT IS THE ROBIN HOOD TAX? Also known as a Financial Transaction Tax (FTT), a Robin Hood Tax is a tiny tax of about 0.05% on transactions involving stocks, bonds and derivatives and foreign exchange 1, which could raise up to 250 billion a year globally to fight poverty and climate change at home and abroad. Small change for the banks - big change for those hit hardest by the financial crisis. To be worthy of the name Robin Hood, the tax must meet two essential criteria: n A Robin Hood Tax should raise billions of pounds of revenue every year. We call for a further 20 billion from the financial sector in the UK. n Revenue generated by a Robin Hood Tax must be used to tackle poverty in the UK and abroad and to fight the worst effects of climate change. A ROBIN HOOD TAX IS A TINY TAX ON FINANCIAL TRANSACTIONS WHICH COULD RAISE UP TO 250 BILLION A YEAR GLOBALLY TO FIGHT POVERTY AND CLIMATE CHANGE AT HOME AND ABROAD. FINANCIAL TRANSACTION TAXES Financial Transaction Taxes (FTTs) are levied on transactions of financial assets, including stocks, bonds, foreign exchange and derivatives. With an FTT, each time a financial product is traded, a tiny percentage (between 0.5% and 0.005% an average of 0.05%) of the value of the trade is collected in tax. The Robin Hood Tax campaign believes FTTs are the most appropriate way to tax the financial sector. Here are three reasons why: n They have the greatest potential to raise revenue. Implemented internationally, Financial Transaction Taxes could yield as much as 250 billion annually, while in the UK we could raise tens of billions of pounds a year. 2 n FTTs are commonplace and have been implemented either permanently or temporarily in at least 40 countries over many decades. 3 In the UK, we have an FTT on some share transactions of 0.5%, which raises around 3 billion a year. FTTs on a broader range of financial products could raise significantly more. n With recent advances in computer technology, FTTs are simple and inexpensive to implement and difficult to avoid. FTTS ARE FAVOURED BECAUSE THEY HAVE THE POTENTIAL TO RAISE THE MOST AMOUNT OF MONEY AND ARE DIFFICULT TO AVOID.

5 ROBIN HOOD TAX FAQs 5 WHY DO WE NEED THE ROBIN HOOD TAX? HOW WOULD THE MONEY BE SPENT? The financial crisis and consequent recession have left a massive hole in the UK s public finances, hitting front line services and jobs. The largest economic meltdown of a generation has had a disastrous impact not just in the UK, but on the public finances of many developing countries as well. Hundreds of thousands of supporters of the Robin Hood Tax campaign believe that banks, hedge funds and the rest of the financial sector should be asked to pay their fair share to clear up the mess they helped create. We are calling on the UK financial sector to pay an additional 20 billion per year in taxation. Internationally, Robin Hood Taxes could raise as much as 250 billion per year. Our proposal is that the money be split as follows: n 50% to be used to protect the poorest and most vulnerable at home; n 25% to be used to help those in developing countries hit hardest by the financial crisis; n 25% towards much needed resources to fight climate change at home and abroad. Here s why we need the Robin Hood Tax: At home The banking crisis has hit people in the UK hard. They are losing their jobs, crucial services and most alarmingly their homes. Youth unemployment is sky-rocketing. According to Save the Children, 1.7 million children in the UK live in severe poverty, which means living without basic necessities such as clothing and food. 4 The UK government has announced plans to cut 81 billion from the national budget through to These cuts will push people further into debt and deeper into poverty. A Robin Hood Tax offers an alternative to the cuts. Here's what a Robin Hood Tax could achieve at home: n In the UK, five weeks of the tax would avoid the planned cuts to UK housing benefit (announced in the 2010 Emergency Budget) that will push hundreds of thousands into homelessness. 5 n Just ten weeks of the tax invested in benefits and tax credits would take the government close to its 2010 target to halve child poverty. 6 THE FINANCIAL CRISIS AND CONSEQUENT RECESSION HAVE LEFT A MASSIVE HOLE IN THE PUBLIC FINANCES BOTH HERE AND IN DEVELOPING COUNTRIES. A ROBIN HOOD TAX WOULD HELP PLUG THIS HOLE. THE ROBIN HOOD TAX OFFERS AN ALTERNATIVE TO THE PLANNED 81 BILLION CUT TO THE NATIONAL BUDGET.

6 ROBIN HOOD TAX FAQs 6 ABROAD The consequences of the financial crisis have been serious in the UK and the developed world, but they have been even worse in more vulnerable countries that did nothing to cause it. As a direct result of the crisis, developing and emerging country output, exports, migrant remittances, capital inflows, and foreign aid have all been lower than expected over the last three years. 7 On the ground, the effect is devastating. In Sub-Saharan Africa, an estimated 30 to 50 thousand extra infants died in The World Bank estimates that, globally, an additional 120 million people have been forced to live on less than US$2 a day and an additional 89 million on less than US$1.25 a day. 9 The Millennium Development Goals are now in jeopardy as governments struggle to live up to their foreign aid commitments. Tony Dolphin, senior economist at the Institute for Public Policy Research, explains: Although the worst of the crisis appears to be in the past, its effect on emerging and developing economies will continue well into the future. Lower employment rates and a lack of social safety nets mean that poverty is higher than it would otherwise have been and achieving the Millennium Development Goal of halving poverty by 2015 will be that much harder. 10 AS A RESULT OF THE FINANCIAL CRISIS, THE ECONOMIC OUTLOOK IN DEVELOPING COUNTRIES IS EVEN WORSE THAN PREVIOUSLY PREDICTED. THE ROBIN HOOD TAX WILL HELP THOSE HIT HARDEST BY POVERTY.

7 ROBIN HOOD TAX FAQs 7 Here's what Robin Hood Taxes could achieve abroad: n Three months of the tax in the UK could pay for free healthcare for 175 million people in Low Income Countries; 11 n Just 1 minute of a UK tax could train 1,000 teachers; 12 n Just 1 minute of a global Robin Hood Tax would pay for the vaccination of 1.5 million African children against meningitis. 13 Climate Change A tragic parallel between climate change and the financial crisis is that those least responsible suffer the most. While rich countries and powerful corporations, many with ties to the financial sector, have produced most of the greenhouse gases that are causing climate change, poorer countries are expected to bear 75-80% of the costs. 14 Disrupted seasonal patterns lead to failed crops, and increased floods, droughts, cyclones and storms lead to severe hunger, poverty, disease, and lost homes. According to The Stern Review of the Economics of Climate Change, there could be up to 200 million environmental refugees by Insurance giant Munich Re estimates that losses from climate-related catastrophes have increased 10% since 1980, and averaged $100 billion per annum over the last decade. 16 The costs fall disproportionately on developing countries, which are less equipped to deal with catastrophes, and in which agriculture particularly subsistence agriculture constitutes a significant proportion of GDP. POORER COUNTRIES SUFFER MOST FROM CLIMATE CHANGE, YET ARE LEAST RESPONSIBLE. THE ROBIN HOOD TAX WILL HELP COMBAT THE DEVASTATING EFFECTS OF CLIMATE CHANGE IN THESE COUNTRIES. The Copenhagen Accord, signed in 2009, committed developed countries to collectively mobilise $30 billion per year in new and additional resources from 2010 to 2012, increasing to $100 billion per year by 2020, to support the mitigation and adaptation efforts of developing countries. These projects are a vital step towards safeguarding vulnerable countries against catastrophic damage. However, significant questions remain over how the funds will be administered, and more pressingly, how they will be raised. The Green Climate Fund, intended to manage and disburse these monies is yet to be designed, and with no agreement reached on how it will be financed, there are concerns that this is a pot that may never be filled.

8 ROBIN HOOD TAX FAQs 8 Worryingly, soon after the 2009 Copenhagen conference it was revealed that the UK s pledge of $2.5 billion for short-term climate finance would be made up entirely of funds from the already announced development budget and at least one-third would be in the form of repayable loans. 17 It is vital that money directed towards climate change efforts be made up from new sources of finance, and not taken away from foreign aid focused on health, education, water supply, and agriculture. Here's what Robin Hood Taxes could achieve for climate change: n Just five days of a global tax would be enough to create a Climate Risk Management Mechanism to insure nations against damages from climate-related natural disasters in developing countries, 18 n In just 4 days, a UK tax would raise enough money to build cyclone resistant housing in Bangladesh. 19 IT IS VITAL THAT MONEY DIRECTED TOWARDS CLIMATE CHANGE EFFORTS BE MADE UP FROM NEW SOURCES OF FINANCE, AND NOT TAKEN AWAY FROM DEVELOPMENT ASSISTANCE FOCUSED ON HEALTH, EDUCATION, WATER SUPPLY, AND AGRICULTURE.

9 ROBIN HOOD TAX FAQs 9 WHY SHOULD THE FINANCIAL SECTOR BE TAXED? Because it can afford it, because it caused the financial crisis that is adversely affecting millions at home and abroad, and because it needs to shoulder more of the burden of alleviating the consequences of its reckless behaviour. In the last two decades the financial sector underwent runaway expansion and has been making excessive profits compared with other sectors. The UK financial sector s income chargeable to tax reached 75 billion in Bonus payments for the same year were over 5 billion, making a total of more than 80 billion. But the true total is much, much higher once you include, for example, hedge funds that are registered in the Cayman Islands and trading in the UK. These funds are notoriously secretive, but in just six months the ten leading hedge funds alone made '$28 billion for their customers in the second half of Add to this commonly used creative accounting techniques, and it is clear that the financial sector s true total profit is many tens of billions higher. As a result it has grown used to paying its employees vast remunerations compared to people employed in other parts of the economy. The financial sector can easily afford to pay 20 billion in tax, revenue which would help protect the poor and vulnerable from the consequences of the banking crisis it helped cause. Furthermore, the financial sector is currently under-taxed. When looking at taxes you have to compare like with like. Consider what taxes you have to pay. Income tax is paid on everything you earn. The equivalent of income tax for the financial sector is corporation tax (which has been reduced from 28% to 24% as a result of the 2010 Emergency Budget). You also pay VAT on most goods and services that you buy, which was increased in January 2011 to 20% from 17.5%. A hike in VAT hits the poor hardest, because with less income, a higher proportion of their income is spent on consumption. 22 Yet incredibly the financial sector remains VAT exempt. According to the European Commission the sector enjoys a tax advantage worth approximately 18 billion a year due to this exemption. Add to this the fact that the Bank of England estimates that by underwriting the banks, the Treasury provides them with an implicit subsidy worth approximately 100bn a year 23 the financial sector enjoys a massive advantage over the rest of the economy. Considering the vast profits of the financial sector, the fact that it is under-taxed and that it precipitated the economic crisis, the financial sector ought to (and can afford to be) taxed more. THE FINANCIAL SECTOR NOT ONLY PRECIPITATED THE CURRENT CRISIS, IT IS ALSO THE MOST ABLE TO PAY.

10 ROBIN HOOD TAX FAQs 10 DOESN T THE FINANCIAL SECTOR MAKE AN IMPORTANT CONTRIBUTION TO OUR ECONOMY? Absolutely, it accounts for about 8% of UK GDP. A healthy and robust financial sector is essential to our society s well-being as its role is to lend to businesses and individuals and provide high street banking services. However, unfettered by regulation, a distinct area of the financial sector - namely casino-style trading, the worst of which is the high frequency trading (HFT) 24 - has grown out of control. There are some estimates that HFT now represents per cent of the trading volume in the US market. 25 A similar picture exists here in the UK. Beyond HFT contributing very little value to the real economy (described by Lord Turner, Chairman of the Financial Services Authority, as socially useless ) it also increases volatility, as traders make large gambles on very small changes in the market. This volatility is illustrated best by the flash crash of May 6, 2010 when a trader sold 75 thousand stocks worth US$ 4.1 billion in 20 minutes. The sudden drop in value spurred high frequency traders to go into a spiral of selling, causing US stock prices to plummet, some down to a cent, and then rebound within minutes. A HEALTHY AND ROBUST FINANCIAL SECTOR IS ESSENTIAL TO OUR ECONOMY. BUT UNFETTERED BY REGULATION, SOME TRADING HAS GROWN OUT OF CONTROL TYPES OF TRADING LORD TURNER, CHAIRMAN OF THE FINANCIAL SERVICES AUTHORITY, HAS CALLED SOCIALLY USELESS. The FTT would primarily target high frequency trading. Under an FTT, financial transactions would be taxed at a very low rate (0.5 to 0.005%). As a result, the cost to those making long-term investments (like pension and insurance funds) would be tiny, whereas the cost to those turning over their portfolios every few seconds would quickly add up, reducing the incentive for high frequency trading. This would reduce the size of bank s casino-trading divisions, but their runaway growth in recent years means that even if they contracted by 25% it would only take us back, approximately, to levels seen in Given the serious economic harm HFT has recently caused, many economists believe that this would not be a bad thing.

11 ROBIN HOOD TAX FAQs 11 CAN THIS WORK WITHOUT GLOBAL AGREEMENT? Yes. International agreement would be great, but we don t have to wait. In fact, the world s experience of FTTs in the opposite of global, they have been implemented unilaterally in more than 40 countries. 27 A good example is the UK s FTT on share transactions, known as the Stamp Duty on shares. Many other countries raise substantial amounts of revenue from FTTs. Brazil, for instance, currently taxes transactions of various assets at varying rates raising $15 billion in The success of these existing FTTs clearly demonstrates that the tax does not need to be implemented globally to work. It is a myth that unless the FTT is global, financial institutions will simply relocate their transactions to avoid having to pay. The IMF confirms this stating that FTTs do not automatically drive out financial activity to an unacceptable extent 28. The secret behind how successful they have been depends on how well they have been designed. With most successful FTTs the physical geography of the trade is irrelevant to the capture of the tax. In other words, it doesn t matter where in the world you conduct the trade if you want to own the asset you ve bought you have to pay the tax. INTERNATIONAL AGREEMENT WOULD BE GREAT, BUT WE DON T HAVE TO WAIT. AT LEAST 40 COUNTRIES AROUND THE GLOBE HAVE IMPLEMENTED FINANCIAL TRANSACTION TAXES. WHERE WOULD THE REVENUE FROM A FINANCIAL TRANSACTION TAX GO? Revenue from the FTT would not end up in Brussels, as some critics have claimed. Revenue, like income from any tax, would be collected by the finance ministry of the country implementing the FTT to be spent by the government in whatever way they wish. In fact, due to the size of our financial sector in the UK rather than having the most to lose from an FTT, we have the most to gain. HOW SHOULD A FINANCIAL TRANSACTION TAX REVENUE BE SPENT? It is not enough that revenue goes only to national Treasuries. It is essential that the proceeds are used for instance to protect the livelihoods of teachers and nurses and create jobs in the UK, as well as live up to our international commitments to save lives abroad and mitigate the adverse effects of climate change. Thankfully, Chancellor Merkel and President Hollande have both reiterated that the proceeds

12 ROBIN HOOD TAX FAQs 12 would be used at least partly for these objectives. In fact, in August 2012 France implemented a 0.2% levy on share trading of leading French companies. The tax is expected to raise almost half a billion Euros a year and President Hollande has indicated that part of the revenue will be used to fight global poverty and HIV and Aids. WON T COMPANIES JUST AVOID THE TAX OR MOVE THEIR BUSINESSES OFFSHORE? Critics of the Financial Transaction Tax (FTT) often say it will lead to a mass exodus from the City. This claim is unsubstantiated and overblown. It is used as a bargaining chip by the banks to cajole the government into not acting. Before looking at the details, to illustrate this, here s an anecdote: Terry Smith, head of Tullett Prebon, a City broker, famously said in December 2009 that he would allow any of the company s 950 London-based staff to move overseas before the Labour governments one-off 50% supertax on bonuses over 25,000 came into force in December The Guardian reported on 14 April 2010 that so far none have taken him up on the offer. 29 Even the Financial Times has argued that banks threats to leave should be faced down, not just because they are unreasonable but because they are of questionable credibility. 30 FTTs are commonplace and have raised billions of dollars of predictable revenue without serious avoidance. As stated by the IMF, FTTs are certainly feasible as witnessed by their use in numerous developed countries. The fact that major financial centers such as the UK, Switzerland, Hong Kong, Singapore, and South Africa levy forms of FTTs indicates that such taxes do not automatically drive out financial activity to an unacceptable extent. 31 The best evidence that an FTT would not cause trade to relocate is right here in the UK: our unilateral tax of 0.5% on all share transactions raises more than 3 billion for the Exchequer each year without a significant loss of business from the UK. A key design feature is that no matter where in the world a UK share transaction takes place - London, New York or the Cayman Islands - the tax can still be collected, and moving your trading business out of the UK doesn t help you avoid the tax. This severely limits the opportunities for avoidance. A similar approach can be adopted for other FTTs, meaning the threat of trades migrating to New York or other financial centres does not stand up. THE FINANCIAL TIMES HAS ARGUED THAT BANKS' THREATS TO LEAVE "SHOULD BE FACED DOWN, NOT JUST BECAUSE THEY ARE UNREASONABLE BUT BECAUSE THEY ARE OF QUESTIONABLE CREDIBILITY".

13 ROBIN HOOD TAX FAQs 13 There are other reasons why banks would not move away. Consider the advantages gained by investors from being concentrated in one marketplace with immediate access to information, support services, and trading partners. The gains from these so-called network externalities greatly outweigh the potential burden from an FTT, and would mitigate any incentive for firms to move to an untaxed location. Of critical importance, banks need to operate in a country rich enough to bail them out if things go wrong. There are not many countries with the ability or willingness to provide such protection, certainly not the Cayman Islands or even Switzerland. Furthermore, time zones are critical for financial transactions, with London being ideally situated between the Asian and US markets. This means that banks and other financial institutions cannot all move to New York as a major financial centre will still be needed in Europe. Germany, the main competitor in the European time zone is already committed to implementing an FTT. Ideally, an FTT would be implemented internationally. However, individual countries should not wait on others to proceed but get on with implementing FTTs on their own financial sectors. WILL ORDINARY PEOPLE LIKE YOU AND ME END UP PAYING THE TAX? No. The FTT will be paid, first and foremost, by the principal buyers/ sellers of financial assets. In fact 85% of the taxable trades are carried out by banks and other financial institutions, such as hedge funds, whose clients are often high-net-worth individuals. Ordinary people do not, by and large, trade assets such as bonds or derivatives. The IMF has studied who will end up paying FTTs and conclude that they would be highly progressive. 32 This means they would fall on the richest institutions and individuals in society, in a similar way to capital gains tax. This is in complete contrast to VAT, or sales tax, which falls disproportionately on the poorest people. Most importantly, it is businesses, rather than individuals, who are constantly trading as opposed to making a one-off purchase as an investment, who will consequently pay the most in tax from an FTT. The greater the frequency of the transactions, the greater the tax bill. Most particularly the FTT will have an impact on High Frequency Trading (HFT), 33 which is regarded as a good outcome by many economists who believe HFT is disruptive and risky and should either be regulated against or considerably reduced in size. THE BURDEN OF AN FTT WOULD FALL ON A DISTINCT AREA OF FINANCIAL SECTOR OPERATIONS THAT IS FAR REMOVED FROM THE AVERAGE CONSUMER.

14 ROBIN HOOD TAX FAQs 14 WOULD A FINANCIAL TRANSACTION TAX HIT OUR PENSION FUNDS? Ordinary people will not end up paying the cost of the FTT through losses to their pension funds. The tax would target traders who buy and sell financial assets frequently, often turning over their entire portfolio in a day. In contrast, pension funds (anywhere in the world) invest over long time horizons, buying and selling on average once every couple of years. A tiny tax applied at entry and exit from the market would therefore be negligible for pension funds. According to a recent study by a leading City think tank, high-frequency traders on the other hand would pay 1,666 times more in FTTs than the average pension fund. 34 HOW WOULD A FINANCIAL TRANSACTION TAX AFFECT OUR ECONOMY AND JOBS? An FTT would increase economic growth and help create jobs. According to the European Commission s most recent impact assessment, introduction of the FTT would increase growth in Europe by 0.2% to 0.4%. The additional revenue provided by the FTT has the potential to contribute to job creation, infrastructure investment and poverty reduction. An FTT would also improve market stability and, through reducing high-frequency trading, reduce the probability of economic crises in the long-term. A recent study by Avinsah Persaud, President of a leading City think tank, takes these positive affects into account and concludes that in the UK an FTT covering shares, bonds and derivatives would raise 8.4 billion a year and boost GDP by 0.25%, or the equivalent of 75,000 new jobs. 35 The revenues raised, if used in a smart and progressive way, could be invested to help stimulate the labour market and increase employment in specific sectors such as manufacturing. This would help rebalance the economy, which especially in the UK has become over-reliant on the financial sector. The FTT may cause a relatively small reduction in the amount of people working in the specialist field of High Frequency Trading (which was described by Adair Turner as 'socially useless') but this would be more than compensated by the increase in jobs in other areas of the economy, leading to a net increase in employment. It is worth noting that many of the countries that currently have FTTs display strong growth, such as South Korea, Hong Kong, India, Brazil, Taiwan, South Africa and Switzerland. Indeed these are some of the fastest growing economies in the world.

15 ROBIN HOOD TAX FAQs 15 ENDNOTES 1. The FTT would apply to large-value foreign exchange transactions (the wholesale market), not retail transactions and so would not apply to people changing money to go on holiday or sending funds to relatives abroad. 2. McCulloch, N., and Pacillo, G., The Tobin Tax - A Review of the Evidence. Institute of Development Studies. University of Sussex, UK 3. Financial Transaction Taxes are commonplace and have been implemented permanently or temporarily over many decades in at least 40 countries, including: Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Colombia, Denmark, Ecuador, Finland, France, Germany, Greece, Guatemala, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Morocco, Netherlands, New Zealand, Pakistan, Panama, Peru, Philippines, Portugal, Russia, Singapore, South Africa, South Korea, Sweden, Switzerland, Taiwan, UK, US, Venezuela and Zimbabwe. See Beitler, D., Raising Revenue: a Review of Financial Transaction Taxes throughout the World. Available at: 4. Save the Children, February 2011, Severe Child Poverty: Nationally and Locally 5. Based on a UK tax raising 20bn a year 6. Hirsch, D., Through Thick and Thin: Tackling Child Poverty in Hard Times. Head of Income Studies. Loughborough University, and own calculations based on a UK tax raising 20bn a year. 7. Dolphin, T., and Chappal, L The Effect of the Global Financial Crisis on Emerging and Developing Economies. Institute for Public Policy Research. London, UK 8. Friedman, J., and Schady, N How Many More Infants Are Likely to Die in Africa as a Result of the Global Financial Crisis? Policy Research Working Paper World Bank. Washington DC, USA 9. Ravallion, M The Crisis and the World s Poorest, Development Outreach. World Bank Institute. Washington DC, USA 10. Dolphin, T., and Chappal, L The Effect of the Global Financial Crisis on Emerging and Developing Economies. Institute for Public Policy Research. London, UK 11. World Health Organisation, 2010, Health Systems Financing. And own calculations based on a UK tax raising 20bn a year. 12. Oxfam Fundraising Statistics, 2010, and own calculations based on a UK tax raising 20bn a year. 13. Source: (accessed on 18/03/2011) and our own calculations based on a global tax raising approximately $400bn a year. 14. The World Bank Group, World Development Report Stern, N The Stern Review on the Economics of Climate Change. HM Treasury. London, UK 16. Munich Climate Insurance Initiative Climate Risk Management Mechanisms including Insurance, in the context of Adaptation to Climate Change. Submitted to the on UNFCCC 24 April Schalatek, L., Bird, N., Brown, J Where s the Money? The Status of Climate Finance PostCopenhagen. Overseas Development Institute., and own calculations based on a global tax raising approximately $400bn a year. 18. Munich Climate Insurance Initiative Climate Risk Management Mechanisms including Insurance, in the context of Adaptation to Climate Change. Submitted to the on UNFCCC 24 April 2009, and own calculations based on a global tax raising approximately $400bn a year accessed on 06/09/ accessed on 06/09/ accessed on 7/4/ VAT takes up 12.1% of the income of the poorest 20%, compared to 5.9% of the richest 20%. Barnard, A The effects of taxes and benefits on household income, 2007/08, Economic & Labour Market Review, Vol. 3, No 8, August 2009, 23. Bank of England, June Financial Stability Report. 24. High-frequency trading (HFT) is the use of sophisticated technological tools to trade securities like stocks or options. HFT employs computerised algorithms to analyse incoming market data and implement proprietary trading strategies. Investment positions are held only for very brief periods of time - even just seconds rapidly trading into and out of positions, sometimes thousands or tens of thousands of times a day. By 2010, high-frequency trading accounted for over 70% of equity trades taking place in the US and was rapidly growing in popularity in Europe and Asia (source: Wikipedia). Some finance experts believe the development of HFT is unhealthy and potentially destabilising. Rapid increases in high frequency trading (HFT) have created a dangerously unstable web of computer-driven trading that spans global stock markets, putting them at risk of a system-wide flash crash. See: Financial Crisis 2: The Rise of the Machines, (R. Gower, 2011):

16 ROBIN HOOD TAX FAQs Wheatley, M We need rules to limit the risks of superfast trades. Financial Times. Published 20 September 2010 on FT.com 26. Schulmeister, S A General Financial Transaction Tax: A Short Cut of the Pros, the Cons, and a Proposal. Working Paper No Östreichisches Institut Für Wirtschaftsforschung. 27. Financial Transaction Taxes are commonplace and have been implemented permanently or temporarily over many decades in at least 40 countries, including: Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Colombia, Denmark, Ecuador, Finland, France, Germany, Greece, Guatemala, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Morocco, Netherlands, New Zealand, Pakistan, Panama, Peru, Philippines, Portugal, Russia, Singapore, South Africa, South Korea, Sweden, Switzerland, Taiwan, UK, US, Venezuela and Zimbabwe. See Beitler, D., Raising Revenue: a Review of Financial Transaction Taxes throughout the World. Available at: Claessens, S., Keen, M., Pazarbasioglu, C Financial Sector Taxation. The IMF s Report to the G-20 and Background Material. International Monetary Fund. Washington DC, USA 29. Teather, D City veteran Terry Smith pockets 4m bonus. Guardian. Published 14 April 2010 on guardian.co.uk accessed on 9/3/ Claessens, S., Keen, M., Pazarbasioglu, C Financial Sector Taxation. The IMF s Report to the G-20 and Background Material. International Monetary Fund. Washington DC, USA 32. Claessens, S., Keen, M., Pazarbasioglu, C Financial Sector Taxation. The IMF s Report to the G-20 and Background Material. International Monetary Fund. Washington DC, USA 33. High-frequency trading (HFT) is the use of sophisticated technological tools to trade securities like stocks or options. HFT employs computerised algorithms to analyse incoming market data and implement proprietary trading strategies. Investment positions are held only for very brief periods of time - even just seconds rapidly trading into and out of positions, sometimes thousands or tens of thousands of times a day. By 2010, high-frequency trading accounted for over 70% of equity trades taking place in the US and was rapidly growing in popularity in Europe and Asia (source: Wikipedia). Some finance experts believe the development of HFT is unhealthy and potentially destabilising. Rapid increases in high frequency trading (HFT) have created a dangerously unstable web of computer-driven trading that spans global stock markets, putting them at risk of a system-wide flash crash. See: Financial Crisis 2: The Rise of the Machines, (R. Gower, 2011): Persaud, A The economic consequences of the EU proposal for a Financial Transaction Tax. Available at

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