Support Grows for Tax on Banks: As Economies Everywhere Struggle, Banks Still Rake in the Money

At a meeting with Commonwealth leaders on 27th November 2009, the British Prime Minister, Gordon Brown, was to suggest the introduction of a tax for banks, the Tobin Tax. The prime minister’s idea was that this tax should be on a global level, meaning that all commonwealth countries should adopt the tax for all financial institutions, including banks.

Earlier in November 2009, Gordon Brown put the tax idea to Tim Geithner, the US treasury secretary, but he dismissed the idea, even though the US government spent millions bailing out Wall Street during 2009.

Although tax is not the only thing each government has been looking at, and it’s not known what area would be taxed, Insurance has also been suggested. Governments have finally realised that something needs to be done so huge government bail-outs to financial institutions don’t happen again in the future.

On 11 February 2010, Helen Pidd’s article in the Guardian newspaper “Global support for a tax on banks is growing, says Gordon Brown”, it says “support is building.”

In his Edinburgh speech, Gordon Brown said the “social contract” between the financial institutions and the public they agreed to serve had in fact, broken down (Stewart, 2010).

Increase in Support forthe Robin Hood Tax

Also in the Guardian newspaper, Heather Stewart wrote “Goldman Sachs, Goldman Sachs, clicking in the votes?” This article refers to the tax Gordon Brown talked about in November: the Tobin Tax.

It seems the Tobin Tax idea is still around and a group of people have started up a website for the public to vote if they think the tax is a good idea or not. The Tobin tax has been paralleled to a Robin Hood tax, taking from the rich and giving to the poor: or in this case the government. The idea is explained on a video through the website and on and has the actor Bill Nighy as the main character.

Heather Stewart’s newspaper article goes on to stay that online voting had been high but there had been a sudden spike in rejections (no’s). Approximately 1700 rejections had come from the same server which when investigated was registered to Goldman Sachs and the bulk of others came from a personal address, it was not stated if this was thought to be from a Goldman employee or not.

Decrease in Support for Banks as Public Loses Faith

This sort of behaviour comes after the banks and other financial institutions in America and the UK were bailed out by their respective governments. It seems they just can’t help themselves when it comes to bad behaviour or greed.

Taxing banks and financial institutions may be a good idea as it will hit them where it hurts most: in the pocket. If the tax is implemented it would need to be iron clad so there are no loop holes for the banks to get around and each country will need to adopt the same rules, so the banks won’t be inclined to move to one country because the rules are in their favour.