IEA - 'Robin Hood’ taxes will rob from everyone
Julian Jessop, Chief Economist at the Institute of Economic Affairs, commented on the the Labour Party’s call for the introduction of a ‘Robin Hood Tax’
“It’s naïve to think that the burden of financial transactions taxes will only fall on banks and speculators. The increased costs would inevitably be passed on to customers, including small investors, in the form of higher charges, and to borrowers in the form of higher interest rates. Non-financial firms will find it more expensive to raise capital and manage risk, which will undermine the economy further.
“Indeed, this is another example of the fallacy that corporations can be tapped for cash with no wider costs. In reality, it’s always ordinary people who ultimately pay, including consumers and workers. Sherwood Forest wasn’t made of magic money trees either.
“Labour’s promise to crack down on tax dodgers is a good soundbite and it’s surely right that companies and individuals should pay what is due. But successive governments have made similar commitments and it’s unclear that Labour’s proposals are a major step forward. Their promise also needs to be set against their plans for large increases in the tax rates payable by large corporations and higher earners. These could actually worsen the problems of tax evasion and avoidance by increasing the incentive to game the system.”
Notes to editors
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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
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