Spain signs up for the Tobin taxTaxes Wed, 30 Jan 2013
Spain is one of 11 countries who have added their signature to the request to implement the Tobin Tax or Financial Transition Tax (FTT). This is a tax that would be levied on bank transactions and is seen as one way of funding economic recovery. Although it might not entirely warrant the ‘Robin Hood’ tax title that it has sometimes been given, it is considered to be one way of making the banks pay towards the cost of the recession.
The tax would mean that a levy would be applied to all payments made from one currency to another as well as all transactions involving shares and bonds. The UK has been very much against the imposition of this tax, worried about the impact it might have on its own banking system. However for the countries of Germany, France, Italy, Portugal, Greece, Austria, Belgium, Estonia, Slovenia, Slovakia and, of course, Spain it could raise much needed revenue.
It was proposed by the economist James Tobin in 1972 although he also warned that it would only be successful if it was applied on a global scale. He initially suggested that there would be a charge of 0.5% on all transactions but it is more probable that it would be at the lesser rate of 0.1% on transactions dealing in bonds or shares.
Critics of the Tobin tax claim that it could lead to traders moving their business to countries which don’t impose it and banks finding other ways of recouping the money from their customers. Supporters argue that it is time the banking industry paid its dues and that it is one step towards a more responsible capitalism.
Whatever your views, the European Union has given permission to 11 of its members to move closer towards its implementation. The next stage will be approval in the European Parliament. We could see the tax in operation next year.