Firstly it's a ridiculously complicated idea, the Robin Hood Tax website suggests that what has made it unworkable in the past was a lack of technology within exchanges, but that simply isn't true, what has made it unworkable in the past and still makes it unworkable now is people. For a Tobin Tax (lets give it its proper name) to work every single country in the world has to sign up to it, that requires all 192 countries to come to an agreement on something, and particularly to come to an agreement on how the resulting money will be collected, shared out and spent. That just isn't going to happen.
The website seems to suggest that derivative trading and currency exchange only happens in developed countries, but pretty much every country in the world has it's own stock exchange of some kind, in fact those in so called developing countries were some of the best performing in the world until the credit crunch came upon us. So if all the G20 countries signed up to the tax how long do you think it will be before Estonia, or Latvia starts to push itself as the financial capital of Europe because they don't have a Tobin Tax, or somewhere like Nigeria which has a very busy stock market, is left out of a Tobin tax as it's a developing African country and suddenly everyone is exchanging their currency there.
Secondly the proponents of a Tobin Tax seem to believe that if you tax an organisation then it only affects that organisation. What a Tobin Tax would do is remove an estimated £400bn from circulation in the private sector and place it in the public and third sector (more on that later). The idea that it will only affect banks and the most evil of people bankers is simply too simplistic. As the same bank carries out retail banking and speculation the profits and bottom lines of the bank will be hit which means less delivered share holder value and lower dividends, potentially resulting in higher charges and costs for retail customers to compensate. It doesn't end there though, equally many large PLCs carry out currency hedging for their international transactions and import export so they will also be affected. Most people don't realise but their pension funds are predominately invested in UK and international PLC so any reduction in their profitability, and share prices will affect the man on the street when he comes to retire.
Thirdly how on earth as we are coming out of an economic downturn (and when the UK economy is so dependent on the financial sector) can anyone in their right mind suggest introducing a tax which is expected to shrink a sector (currency exchange) by 14%, just because it is already a profitable sector. Remember as well that that is shrinkage of the market not shrinkage of profitability, so profits will potentially be hit even harder than that. It's a crazy idea to suggest that a sector is too efficient (profitable) and therefore we should add some inefficiencies to it. If a government department was running very efficiently how would these same people react if the suggestion was that it's budget could be slashed as it's doing so well.
Finally take a look at who is promoting this idea. It's all charities and unions, the organisations that would no doubt be the main recipients of this tax, they would be the ones delivering projects in the third world and tackling poverty. They're seeing reducing revenues themselves and imagining a brave new world where they don't even have to go out and convince the public to give them money, it just magically comes to them from greedy rich capitalists.
Most worryingly is the way Bill Nighy, who is fronting the campaign video, has described it :
"Now I'd ask our leaders to think about it seriously – to come up with a brilliant, new, modern source of money in a new decade."
It isn't a new modern source of money, it's just moving the same money from somewhere efficient and putting it somewhere inefficient. I hope for the economies sake that people start to realise that quickly.
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