Listing of notable reaction to James Tobin's 1972 tax proposal
This article is a list of all notable reaction to James Tobin's 1972 proposal of what is now known as the Tobin tax.
Non-government supporters and opponents
1936 to 1989
1990 to 1999
- June 16, 1995, Paul Bernd Spahn opposed the original form of the Tobin tax and proposed his own variation (see Spahn tax).
- On August 1, 1995, an IMF Working Paper No. 95/77 Financial Transactions Taxes by Shome, Parthasrathi and Stotsky, Janet Gale found that "the economic effects of financial transactions taxes on capital markets are seen to be pervasive. They may impose significant efficiency costs by impairing the smooth functioning of financial markets, increasing the cost of capital, and distorting the structure of capital financing. Their effects on the volatility of capital flows, either in domestic or international financial markets, are uncertain, as are their distributional and revenue effects."[33]
- 1997 - Supporter - Ignacio Ramonet
- 1998 - Supporter - Economics writer Linda McQuaig[1]
- 1998 - Supporters - ATTAC (Association for the Taxation of Financial Transactions for the Aid of Citizens)
2000 to 2004
- In 2001 the charity War on Want released The Robin Hood Tax,[34] a report explaining the case for a currency transactions tax. War on Want also sets up the Tobin Tax Network to develop the proposal and press for its introduction.
- 2001 - The Guardian wrote that Tobin Tax would make everyone poorer. The liquidity on the currency market would decrease, the prices would become more volatile and transporting goods would become more difficult and expensive. According to The Guardian, speculators are needed to risk their money so that liquidity would be better.[35]
- 2001 - September 19 - Speculator George Soros, put forward a different proposal, special drawing rights or SDRs that the rich countries would pledge for the purpose of providing international assistance, without necessarily dismissing the Tobin tax idea.[36] He stated, "It is not at all clear to me that a Tobin tax would reduce volatility in the currency markets. It is true that it may discourage currency speculation but it would also reduce the liquidity of the marketplace."
- In 2001, the International Monetary Fund conducted considerable research that opposes a transaction tax. In 2001, findings by Habermeier, Karl Friedrich, and Andrei Kirilenko, state that "transaction taxes or such equivalents as capital controls can have negative effects on price discovery, volatility, and liquidity and lead to a reduction in the informational efficiency of markets."[37] (See also IMF position of 2010, below)
2005 to 2008
- In 2006, Markku Lanne and Timo Vesala of University of Helsinki write in the Bank of Finland Research Discussion Paper No. 11/2006 The Effect of a Transaction Tax on Exchange Rate Volatility(2006) that "a transaction tax is likely to amplify, not dampen, volatility in foreign exchange markets."[38]
- In September 2006, George Monbiot argues in favour of a Tobin Tax, in his book Heat: How to Stop the Planet Burning.[39]
2009
- In August, 2009, Adair Turner, chair of the United Kingdom Financial Services Authority, in an interview for Prospect magazine supported the idea of new global taxes on financial transactions, warning that a “swollen” financial sector paying excessive salaries has grown too big for society.[40][41]
- October 5, 2009 - Supporter - Joseph Stiglitz (recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979, and former Senior Vice President and Chief Economist of the World Bank.)[42]
- In early November 2009, the "Lex" column of Financial Times opposes the Tobin tax, in "Tobin or not Tobin" it writes "The Tobin tax should remain a curiosity of economic history."[43]
- In November 2009, Matthew Sinclair, Research Director of the TaxPayers' Alliance, wrote an article in the London newspaper City AM A Tobin Tax would destroy London without making the world safer [44]
- In late November 2009 Paul Krugman, New York Times columnist and professor of Economics and International Affairs at Princeton University, argued that a Tobin Tax would have ameliorated the Financial crisis of 2007–2010. He wrote, "bad investments aren’t the whole story of the crisis. What turned those bad investments into catastrophe was the financial system’s excessive reliance on short-term money ... a financial transactions tax, by discouraging reliance on ultra-short-run financing, would have made such a run much less likely. So contrary to what the skeptics say, such a tax would have helped prevent the current crisis — and could help us avoid a future replay." Krugman wrote that it is "an idea whose time has come."[45]
- In late November 2009, Economist Charles Goodhart, Professor Emeritus of Banking and Finance at London School of Economics and developer of Goodhart's law, was scathing in his criticism of "radical and consumer groups [that] go on backing the Tobin tax idea". He argued, "Many of those who support such a tax neither know, nor care, what effects it might have on market efficiency. Besides a, generally misguided view that its imposition would fall primarily on the financial sector, rather than be passed on to its customers, the hope is that such a tax would produce lots of lovely revenue, to be spent on good deeds, such as foreign aid."[46]
- December 7, 2009, economist Stephany Griffith-Jones advocated a very low but "internationally co-ordinated tax on financial transactions, often described as a Tobin tax."[47]
- December 7, 2009 - Supporter - Hector Sants, Chief Executive Officer of the United Kingdom Financial Services Authority[47]
2010
(The) imposition of a global tax is an inappropriate response and a further burden to industries, especially small and medium enterprises, and consumers in the wake of the global financial crisis. We also believe that the proposals under consideration would be harmful for a range of additional reasons, including the practical challenges of implementing any such tax.[48]
- 31 March 2010 - "350 economists, including Jeffrey Sachs and the Nobel laureate Joseph Stiglitz, from more than 35 countries signed a letter to the leaders of the Group of 20 countries calling on them to impose a tax on financial transactions between financial institutions, but not on transactions conducted by individuals."[49] The then leaders of Europe's three biggest economies - Angela Merkel of Germany, Nicolas Sarkozy of France and Gordon Brown of Britain -were "promoting a financial transaction tax as a way of raising as much as $US 400billion a year to fulfil commitments to domestic budgets, poverty reduction, global health and climate change mitigation."[49] A coalition of community organizations in Australia also supported the tax.[49]
- April 16, 2010 - International Monetary Fund - "While the IMF does not endorse a Financial Transaction Tax (FTT), it concedes that 'The FTT should not be dismissed on grounds of administrative practicality.'[50] This is important because the Fund might have rejected it outright. However, the IMF interprets its mandate from the G20 quite narrowly and therefore does not endorse the FTT on the grounds that it 'does not appear well suited to the specific purposes set out in the [2009/2010] mandate from the G-20 leaders.'[50]"[51] (See also IMF position of 2001, above)
2011
- October 10, 2011 - Charity group Oxfam, which is campaigning for a financial transaction tax, banned a pensioner from one of its shops, after he complained about a poster which highlighted Oxfam's call for a “Robin Hood” tax of banks and financial institutions. Pensioner Barry Nowlan has incurred £10,000 in legal fees fighting the ban. Nowlan, 63, of Taunton, says he has a legitimate complaint about Oxfam's “political campaigning.”[52]
- November 2, 2011 - Microsoft founder Bill Gates in an interview with the BBC declared he backs a Tobin tax.”[53]