The Rt Hon George Osborne, MP

Chancellor of the Exchequer

HM Treasury

1, Horseguards Road

London SW1A 2HQ

25 August 2011

Dear George,
I am writing to you to ask that you support the proposal put forward by Angela Merkel and Nicolas Sarkozy for a Europe wide tax on financial transactions, sometimes referred to as ‘the Robin Hood tax'. As you will be aware, this is small levy on cross border financial dealings, designed to raise revenue from the financial services sector, designed to raise around £20bn. Several constituents have contacted my office regarding this issue, feeling that there is an injustice in public services and environmental protection being cut back as a result of the folly of those working in the financial sector that have caused the current crisis.
The objections raised by the Adam Smith Institute and others regarding the danger posed to UK industry are selective and ignore evidence to the contrary. A good example of this is the levy raised on share transactions. The UK has had a 0.5% (one of the highest in the world) tax on all share transactions in UK incorporated companies. It is chargeable whether the transaction takes place in the UK or overseas, and whether either party is resident in the UK or not. In 2000-2001, the tax raised £4.5 billion in revenue and had the lowest cost of collection of all major taxes (0.09% as opposed to an average collection cost over all major financial taxes of 1.11%). This tax had not damaged London's standing as a major equity trading centre.
It cannot be argued that this proposal has no support from those with knowledge of the financial services industry. Lord Turner, George Soros and Warren Buffett, have all backed the policy. Furthermore, the economists Joseph Stiglitz, Paul Krugman, Jeffery Sachs have also offered their support. This is a serious, workable policy which will help to correct a serious injustice.
In a working paper published this month John D. Brondolo, working for the IMF, concluded that the Robin Hood tax is practical to administer, and would work better "if major financial centre countries were to jointly introduce the tax in a fairly uniform manner". The support of the leaders of the European Union provides a unique historical moment in which to do just that. It is imperative that this opportunity is seized. The crisis which began in 2008 has been an economic and social catastrophe for millions of ordinary people. The time is right for those who caused it to share some of the burden of rectifying the situation.

Yours sincerely,

Caroline Lucas, MP, Brighton Pavilion