Endorsed by doctors at this year’s BMA annual representative meeting, the Tobin tax on financial transactions could raise £20bn a year for the NHS, public services, humanitarian aid and fighting climate change
Robin Hood famously took from the rich to give to the poor. Now the BMA is backing a campaign that aims to do the same.
The Tobin tax, also known as the Robin Hood or financial transaction tax, is levied on financial transactions to raise funds for public services. It is claimed a tax of just 0.05 per cent would raise an estimated £20bn for the UK each year. That money could be reinvested into the NHS, public services, fighting climate change and overseas humanitarian aid.
Currently, taxation on shares raises £3.75bn a year. Campaigners propose that this should be expanded to bonds, derivatives and foreign exchange to bring in more funds.
The BMA will be championing the cause following calls by Manchester medical student Khalil Secker at this year’s BMA annual representative meeting in Bournemouth. Fifty-three per cent of representatives voted in favour of backing the tax.
The association will now join other charities and trade unions in lobbying the government to bring in the measure, which was first suggested by Nobel Laureate economist James Tobin in 1972.
Mr Secker is a passionate advocate for the tax, which he believes is fundamental to fighting inequality. He says: ‘The NHS is facing huge budget cuts. One in five families in the UK lives in fuel poverty.
‘The government promised to increase its international aid budget to 0.7 per cent of the gross national income, but it hasn’t done that and we need to fight climate change. It’s important we find a fair way to raise the money needed.’
In addition to raising funds, advocates of the tax say it would curb excessive financial speculation by reducing destabilising movements of funds between foreign currency exchanges.
Stamp Out Poverty has been leading the campaign to bring in the tax in the UK. Director David Hillman explains: ‘These transactions are very fast and high-frequency, with low margins carried out by computers. They serve no real economic purpose.
‘It would be better for the market to be shrunk a bit and get back to traditional banking, which is based on long-term gain.’
But why is the Tobin tax an issue for the BMA? Mr Secker believes the association’s support adds credibility to the campaign.
He says: ‘The main thing is to get lots of members to petition and be aware of the issue. It’s just ... making people realise it’s not a crazy idea. It makes good economic and moral sense. When an organisation like the BMA takes on the issue, it [is] seen as being more within the realms of common sense. The government is trying to put out the message it’s a bit kooky.’
Friends and foes
The BMA’s support has been welcomed by Mr Hillman. He says: ‘Trade unions are there to stand up for their members, and the financial transaction tax can bring in revenue to protect services, and help to create and save jobs.’
The association is in good company, with fellow supporters of the idea including UNISON, the National Union of Teachers, the TUC, Oxfam, and medical student campaign network Medsin UK. Other high-profile advocates include former BMA president Professor Sir Michael Marmot, Archbishop of Canterbury Rowan Williams, actor Bill Nighy. Thirty-nine MPs have also shown their support on a campaigning website.
There have been calls for an EU-wide Tobin tax, with leaders of the four big Eurozone countries, Germany, France, Italy and Spain, expressing their support. France recently brought in a levy of 0.2 per cent on share trading, which is expected to raise around €500m a year (£390m).
French president François Hollande has pledged that part of the revenue raised will be used to fight global poverty and fund HIV/AIDS treatment.
Austria, Belgium, Germany, Greece, Italy, Portugal, Slovenia and Spain also plan to bring in the tax by the end of the year.
However, not everybody is in agreement. Chancellor George Osborne says the levy would be subject to tax avoidance, and could drive the banking sector out of the UK.
Sheffield consultant psychiatrist Paul Miller told the ARM that it was ‘an ill-conceived proposal’ that could drive the banking sector out of the UK. Dr Miller said: ‘Unless it is universal it will not work. If you think the entire world is going to impose this tax then I am astonished.’
These are arguments Mr Secker strongly refutes: ‘The myth that is most damaging is that it can’t work on a purely national level but it won’t work globally because it would be impossible for the whole world to put it in place.
‘We already have a transaction tax, which is stamp duty. It works perfectly well and is impossible to dodge.’
He adds that, according to the Bank of England’s executive director of financial stability Andrew Haldane, the government was prepared to pay an ‘implicit subsidy’ of £100bn to UK banks in 2009.
‘There are very few countries that can afford that,’ says Mr Secker. ‘France and Germany can, but they are putting in place the Robin Hood tax so the banks can’t move there.
‘The banks couldn’t leave Europe because time zones are very important in international trading. They need somewhere to trade between when the eastern stock exchange closes and the exchange in the USA opens.’
But aren’t tax matters a concern for governments rather than doctors? Absolutely not says Mr Secker.
‘It’s about finding money to address poverty. We are facing lots of job cuts in the NHS. Nurses and doctors are losing their jobs, and we need money. It’s not good for us, and it’s not good for our patients.
‘If we ignore the economic context in which healthcare operates, we are ignoring the history of the NHS. The people who first started the NHS had to be bold and make economic arguments for its creation.’
Opponents have argued there is no guarantee the revenue raised would be used for worthy causes. What would stop funds being spent on defence, for example?
‘It’s a two-part campaign,’ Mr Secker reasons. ‘Making sure it gets implemented, and making sure it’s spent in the right way.
'The more we campaign, the more likely that is to happen.’
The case for the tax
Stamp Out Poverty director David Hillman: ‘The financial sector has got away with not paying its way for decades, and we all went along with that because we thought we were deriving great benefits. That’s come unstuck by the economic crisis [the sector has] caused.
‘The sector has been living on easy street for a very long time, and can certainly afford to pay more in taxation.’
Oxfam spokesperson Jon Slater: ‘The world’s poorest countries have been hit hard by an economic crisis they did nothing to cause. It is wrong for poor people in Lusaka to pay the price of mistakes made by bankers in London. Those who caused the economic crisis should pay to clean up the mess.
‘[This] offers a real opportunity to help repair the human damage caused by the global economic crisis, protect public services at home, fight poverty abroad, and help meet our obligations to help people in poor countries protect themselves from climate change.’
Former BMA president Professor Sir Michael Marmot: ‘We can make great progress towards closing the health gap by improving the conditions in which people are born, grow, live, work and age…
‘To make such progress, we must also deal with inequalities in power, money and resources — the social injustice that is killing on a grand scale.’
(Professor Marmot quoted from ‘Closing the Gap in a Generation’, Bulletin of the World Health Organisation, 2011)