Sir, – The financial transaction tax is gaining momentum. It is a proposal for a small tax on the financial sector to raise much needed revenue for public investment and reduce the harmful activity caused by short term speculators.
Already 10 EU countries are supporting its introduction (including France, Spain, Portugal, and Germany).
Irish people know from our first-hand experience of the 2008 crash and subsequent recession the destruction that is caused by the irresponsibility of the financial sector and financial markets that are focused on excessive profit seeking from ever-riskier speculative investments. The financial transaction tax, at 0.1 per cent on trading in bonds and shares and 0.01 per cent on trading in derivatives, would raise between €320 million and €360 million in revenue for the Irish exchequer, according to research undertaken by the Nevin Economic Research Institute.
This is a significant sum that could help redress some of the negative consequences of the financial crash and austerity in Ireland by investing in hospitals, schools, addressing climate change and helping fulfil Ireland’s overseas aid commitments.
Ireland has an important role to play in implementing the financial transaction tax as we are a global centre for collective investment funds. In 2015, the total value of investment funds being managed in Ireland was approaching €2 trillion (that’s €2,000 billion).
Some of this activity, such as high-frequency financial trading, is economically and socially destructive. Indeed the authors of the Spirit Level, the ground-breaking work on inequality, Richard G Wilkinson and Kate Pickett, argue that the financial services sector has "become a powerful driver of inequality".
The tax could deter such speculative trading and encourage more socially responsible investment and the development of a sustainable “ethical economy”.
Given the small size of the tax, there is also little evidence that there would be significant relocation of activities from Dublin to elsewhere. It appears there is some official reluctance for Ireland to support the financial transaction tax unless the UK also does so. However, we believe Ireland should take the lead on this and support its introduction, rather than deferring to London. By linking with other countries to promote its implementation, Ireland would help towards the reconstruction of a more socially orientated European Union.
Ultimately, the financial transaction tax should form part of a wider reform package that seeks to remake the financial sector so that it better serves the wider economy and is giving something back to society.
The financial transaction tax could contribute to protecting us against future economic storms, much of which are being driven by speculative financial markets. Given technological advances, the tax can be implemented.
Most importantly, it is the ethical and moral thing to do. – Yours, etc,
Dr RORY HEARNE,
Senior Policy Analyst,
PAUL SWEENEY,
Chairman,
Tasc;
Prof DAVID JACOBSON,
Emeritus Professor
of Economics,
Dublin City University,
Prof GERARD HUGHES,
Trinity Business School,
Trinity College Dublin;
Dr ROLAND ERNE,
Senior Lecturer,
UCD School of Business;
Prof PATRICK J DRUDY,
Emeritus Professor
of Economics,
Trinity College Dublin;
Prof SEÁN Ó RIAIN,
Maynooth University;
Dr COLM O’DOHERTY,
Lecturer,
Institute of
Technology, Tralee;
Dr DARYL D’ART,
University of Limerick and Dublin City University;
ROSHEEN CALLENDER,
Dr TOM McDONNELL,
Nevin Economic
Research Institute;
Prof JOHN BARRY,
Queen’s University Belfast;
Prof PEADAR KIRBY,
University of Limerick
and National University
of Ireland, Maynooth;
NAT O’CONNOR,
Lecturer,
Ulster University
Prof JAMES STEWART,
School of Business Studies,
Trinity College Dublin;
BRENDAN BARTLEY,
Spatial Analyst,
National Institute for
Regional and Spatial
Analysis, Maynooth;
PATRICK KINSELLA,
Prof James Wickham,
Tasc;
Dr DAVID BEGG,
Director, Tasc ;
Dr SEÁN HEALY,
Director,
Social Justice Ireland.