Tobin tax - The 'Robin Hood' tax

The proposal - financial transactions across Europe should be subject to a transaction tax (The Tobin tax otherwise known as the Robin Hood tax)

Tim Bennett, Deputy Editor of http://www.moneyweek.com explains what the Tobin tax is, why the President of the European Commission, Jose Manuel Barroso, thinks it's a good idea, and then argues why it won't work and could do a lot of damage.

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Category:

Education

Tags:

• tobin tax
• robin hood tax
• tax
• tobin
• europe
• finance
• investments
• banks
• European Union
• Money
• educational

[MoneyWeekVideos]

Baldurs89 - anything that adds a layer of admin/processing cost will tend to reduce volume in any market. The easiest way around this problem of course would be to move transactions outside of its jurisdiction altogether. Sure the banks can reorganise their IT to slice any tax off any transaction but why bother when you don't have to?

[MoneyWeekVideos]

David Cameron is 100% right to block this tax at a European level. We already have such a tax - it's called stamp duty (0.5% on share transactions) and it too should be abolished. We don't need yet another pointless tax at just the wrong time. Tim.

[MoneyWeekVideos]

mi5base - I think we will agree to disagree! This tax could wipe out a good chunk of the European derivatives industry, which will simply relocate. Yet no-one will be forced to change behaviour (e.g. short versus long term trading) unless a ban is global. Worse, the many organisations that use these contracts to hedge risk (not create it) will simply pass any extra costs on to shareholders or customers. So it's a damaging and pointless move IMO.

[Baldurs89]

Why does this decrease the amount of transactions?

For example. If you make 10 transactions - each one valued at 100€ (1000€ in total), the tax fees would be the exactly the same as if you would make one transaction for 1000€.

Please explain how I am misunderstanding this.

[THCfinanceacad]

Thanks for this clear description of the concept. The point of the tax is that realistically no one will notice. The huge amounts of tax revenue it will generate overrides the other arguments - bankers will increase their commission over the next few months, as interest rates increase; introduce this now - it will be ignored. Good point about stamp duty - could be a good opportunity to remove this completely and perhaps have a 0.5 & 0.05 Tobin instead. Realistic relocation options? Thanks Adam

[mi5base]

Dear Tim,

I watched your interesting video about Tobin Tax and I cannot agree with you on your claim that Tobin Tax will rise volatility. There are mainly two reasons for volatility. Undervaluation or Speculation (overvaluation). One could also argument that although the Tobin Tax decreases trading frequency, it also encourages long-term holding and discourage short term speculation, as the holders will want to make sure that their margin covers both transaction fees and taxes.

[callej123]

Really like your videos! Keep 'em coming!

[hayden50]

EXCELLENT VIDEO....

[engkonkzmarc]

Tim Keep Posting !!!! relevant issues with current economic difficulties... nice job mate!