Sunday, January 8, 2012

The Tobin Tax and the Populist Pitch

Nicolas Sarkozy knows that in order to win re-election, he needs to scarf up the "populist" vote that he won in 2007 by poaching on the FN's xenophobic territory and that he risks losing in 2012 because the FN is poaching on his "defend the working man" territory. Since a lot of people are angry at the financial sector, attacking "speculation" seems like a political vein worth exploiting, and Sarkozy is going after it by proposing to establish a "Tobin tax" on financial transactions whether his EU partners like it or not. This was the issue that drove David Cameron out of the euro settlement, and now it risks alienating Monti in Italy and perhaps Merkel as well.

There's a problem, though, in making this a campaign issue: Sarkozy was against the Tobin Tax (especially when implemented by a country in the absence of cooperation from competitors) before he was for it (h/t Mediapart):

Gotchas aside, is the Tobin tax a good idea? I think so, provided that its proceeds are used to finance deposit insurance. And of course it would be a better idea if everyone would adopt it, but that seems impossible while David Cameron remains in office.


FrédéricLN said...

Well, I think David Cameron is in favour of this tax. The UK just created another transactions tax on the LSE. (I don't remember its exact nature).

But he wouldn't want London to loose its competitive edge in financial services, and he wouldn't want Europe to take decisions regarding the regulation of London-based finance.

That are serious issues: where is the right place to regulate a totally globalized industry?

(Signature link - my last post on the issue!).

Louis said...

On France Info yesterday, the head of Attac France reminded everybody one of the first fiscal decisions of the new majority after 2007: the suppression of the "impôt de bourse", a national tax on financial operations, in 2008. So the whole operation seems like rolling back on past deeds. During an electoral campaign, this manoeuver seems almost too obvious. Let's indeed reach out to the "little man who is upset at bankers". Of course, it would be odd for Sarkozy to not take on board a few social themes that divide the socialist party.

This get us nowhere in the debate over the Tobin tax.