Smart Taxes generally frowns upon transaction taxes as after all, a market needs lots of transactions to work efficiency at what it does best. However, there is such as thing as ‘too much of a good thing’ and financial transactions are an illustrative case.
Here is Ellen Brown on the subject of the Tobin Tax – a tiny percentage tax on financial transactions that adds a little friction brake on runaway surges. Systems theory predicts that a little friction is all that is needed to completely change the emergent characteristic of a complex adaptive system, such as the international financial market.
A LITTLE POPULIST RETRIBUTION: MAKING WALL STREET PAY ITS FAIR SHARE
Posted on November 11, 2009 by Ellen Brown
Wall Street’s speculative traders have managed to trade in practically the only products left on the planet that are not subject to a sales tax. The fact that trades in “financial products” remain untaxed suggests a tidy way the public could recover some of its bailout money. (link to article)
also by Ellen Brown
Shifting the Burden From Main Street to Wall Street: Why We Need a “Tobin Tax”
“Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. Our laws are the output of a system which clothes rascals in robes and honesty in rags.”
-1890 speech by Populist leader Mary Ellen Lease, thought to be the prototype for Dorothy in The Wizard of Oz. (link to article)
And just to remind you of the arguments against transaction taxes (on real stuff) , we point you to “The Other Taxpayers Alliance” website on the subject of VAT hikes in the UK ;- readers localise for Ireland.
VAT: The Tories’ favourite tax
There is growing speculation that both the Tories and Labour intend to increase VAT to 20% after the election.
Given our preference for higher taxation over brutal cuts (and ignoring, for the moment, that this whole debate is premature), a VAT rise appears to have much to commend it. VAT is relatively cheap to administer, difficult to evade, and is clearly more palatable to party leaders than some taxes.
But that doesn’t make it fair. VAT is immensely regressive, hitting the poorest 10% hardest – as those at the bottom spend nearly all of their income. Along with other indirect taxes, VAT counteracts the progressive effect of direct taxes, as shown in David Byrne and Sally Ruane’s study, and, more recently, by Richard Murphy.
So, future chancellor, do any of the following:
- Uncap national insurance
- A windfall tax on bankers or one of these alternatives
- A land value or mansion tax
- Charge capital gains at income tax rates
- Extend inheritance tax
- Minimum tax rates for high earners
- A child poverty charge or wealth tax
- Clamp down on tax avoidance and introduce a general anti-avoidance principle
- Cut pensions tax relief for the rich
- A pension tax on companies
- Abolish the domicile rule
But don’t increase VAT. In fact, leave it where it is, at 15%. (link to full article)
