The lunatic left all promote a ‘Robin Hood’ tax, aka a Tobin Tax or Financial Transactions Tax. Matt McCarten, himself a stranger to paying tax, even promoted it in the Herald on Sunday.
The problem with such a tax is that it doesn’t work, and it has been tried before with disastrous consequences..
James Tobin, a Nobel-prize-winning economist and disciple of Keynes, first proposed the idea of a global transactions tax—on foreign exchange—in 1972. This newspaper has regularly criticised it on two counts: it would be unworkable unless all governments signed up to it (and perhaps even if they did); and a levy would harm the liquidity of financial markets, making asset prices more volatile. Now there is a third, equally valid objection: that a Tobin tax is a poor solution to the problems in banking—too much leverage, too little care taken in assessing risks and banks that are deemed too big to fail. Read more »