Tobin tax is a political fig leaf
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As the eurozone sovereign debt crisis still shows no sign of abating, many headlines and much debate has centered on the introduction of a financial transactions tax.
The financial transactions tax – or Tobin tax, or Robin Hood tax – has been pushed, and pushed by French leader Nicolas Sarkozy.
It’s often spoken of as a panacea to the eurozone woes. But it’s not. And Sarkozy will understand this.
The French premier faces an election this year and if he wants to take an active part in saving the eurozone then he will have to bash the banks.
Yet, there has yet to be a conclusive argument for the introduction of a Europe-wide tax.
British prime minister David Cameron has said he will veto any such tax. German chancellor Angela Merkel has said she will struggle to gain backing for it from her coalition. No plans have been made to introduce such a tax in the US.
If introduced, it would only harm the European economy. Or so Big Four accountancy firm Ernst & Young believes.
More importantly, there is as yet no clear plan to save the eurozone from its debt crisis and much time and energy has been wasted over the financial transactions tax.
If Sarkozy wishes to impose the tax within France then if not encouraged, he should certainly not be blocked.
However, it would be of far greater use of M. Sarkozy’s time if he were to rally Europe’s leaders into agreement over a comprehensive solution to the debt crisis rather than lobbying over a tax that nobody has very strong feelings about.
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