3 Nov 2011

Gates calls on G20 to adopt ‘Robin Hood’ tax

Nicolas Sarkozy says Bill Gates’ proposal of a ‘Robin Hood’ tax on financial transactions is “technically possible”, during the meeting of G20 leaders in Cannes.

Microsoft billionaire Bill Gates is submitting a report on development financing to leaders at the G20 summit in Cannes. It recommends leaders adopt a financial transaction tax to help poor countries raise more tax revenue for themselves.

According to the report, the levy on finance could raise an extra £30bn a year which Mr Gates says could go towards fighting global poverty and helping developed nations meet their aid pledges.

France’s President Nicolas Sarkozy confirmed his support for a transaction tax during a press conference in Cannes on Thursday. He said that a ‘Robin Hood’ tax was “technically possible”, and although there is no consensus among G20 leaders – George Osborne for one has said it is not viable – Mr Sarkozy said that Brazil and Argentina are in favour.

Actor Bill Nighy will add some more high-profile support to the tax, as he joins protesters in Cannes who are calling on the G20 to implement the proposal for a levy on banks, hedge funds and other financial institutions.

It also won the backing of the Archbishop of Canterbury this week, who called for a bold reforms to address public outrage at the “disastrous effects of global capitalism”. Archbishop Rowan Williams called for a full debate on the introduction of a “Robin Hood” tax which would levy 0.05 per cent on financial transactions.

‘Deep exasperation with financial establishments’

Writing in the Financial Times, the archbishop called the ongoing Occupy London demonstrations an “expression of a widespread and deep exasperation with the financial establishment”.

David Cameron backed the archbishop’s call for greater responsibility by “people at the top of our society” but played down the idea of introducing a Tobin tax in the UK.

What is the ‘Robin Hood’ tax?

The “Robin Hood” tax – or Tobin tax, as it also known – refers to the ideas of the American economist, James Tobin, who proposed constraints on financial transactions to limit their destabilising effects on markets and the greater economy.

He argued that raising the cost of currency transactions would reduce the “serious and painful internal economic consequences” of exchange rate speculation.

Overshadowed by eurozone debt crisis

The financial transactions tax was due to dominate the G20 summit before the Greek debt crisis spiralled further out of control, prompting French and German leaders to summon Prime Minister Papandreou for emergency talks.

In August, French President Nicolas Sarkozy and German Chancellor Angela Merkel affirmed their support for the proposed tax across Europe and tried to garner support ahead of this week’s summit.

But the financial transactions tax has been fiercely opposed by Chancellor George Osborne unless it would be rolled out globally, saying a European version of the tax would have a negative impact on London’s role as a business centre.