The Financial Transaction Tax (FTT), or Robin Hood Tax.
The first campaign Attac was associated with was the campaign for a tax on financial transactions.
Attac was founded in 1998, just after a wave of financial crises which devastated the economies of Mexico (in 1994/1995) and South-East Asia (in 1997/1998). The East Asian crisis had repercussions throughout Asia and in other countries ranging from Brazil to Russia. People the world over realised how big and powerful the financial sector of the economy had become, and how easy it was for a financial crisis to destabilise whole countries and even continents. There were many calls for a small levy on financial transactions, which would curb speculation and would also, given the size of the financial sector, have the potential to raise huge amounts of revenue. There was also, of course, strong opposition from the financial sector against any form of taxation or regulation.
The financial crisis of 2008 has re-awakened calls for an FTT, otherwise known as the Robin Hood Tax, and the campaign is strongly supported by public opinion worldwide.
In 2011, the European Commission introduced its own proposal for an FTT and now, eleven EU countries (Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain) have agreed to introduce an FTT and to implement a 0.1% tax on bonds and shares and a 0.01% tax on derivatives by January 2016. Ireland is not one of these countries.
The European FTT could raise up to 35 billion Euro per year in revenue for the participating countries and up to 500 million Euro for Ireland if it participated. It would ensure that the financial sector made a fair and substantial contribution to public finances and would discourage financial transactions which do not contribute to the efficiency of financial markets or of the real economy. It would not affect private households or SMEs and would be good for business. Indeed, Avinash Persaud, former Head of Currency at JP Morgan has written in the Financial Times that “believers in the true purpose of finance – the funding of genuine economic activity – should embrace the FTT”.
The Irish government’s position is that an FTT would be best applied on a wide international basis to include the major financial centres. Its refusal to join the EU initiative on the FTT is essentially based on reasons of competitiveness. We do not know where the next financial crisis will start, but when it comes we will all be affected. The FTT on its own may not prevent it, but in a world where unbridled finance has such destructive power, it would be a small step in the right direction. Competitiveness may end up being counter-productive. The alternative is solidarity.
In Ireland, the Campaign for the Robin Hood Tax is led by Claiming our Future. Its main aim is to convince the Irish government to join the European Initiative on the FTT and to lend Ireland’s support to moves to introduce a Financial Transaction Tax globally.