Robin Hood Tax?

I have just been watching the Robin Hood Tax short film featuring Bill Nighy on the Robin Hood Tax site (which incidentally features some really nice Robin Hood themed social sharing buttons...).

The basic idea is a very low late of tax (0.05%) levied on a global basis on various "speculative" banking transactions, the proceeds of which would be used to fund deserving causes both domestically and internationally.

At the end of the film you get to vote on whether this is a good or a bad plan. And the reality is that I have absolutely no idea.

It is based on the Tobin Tax concept, which was originally floated by James Tobin (a Nobel prize winning economist) as a way to damp down international currency speculation by levying a small tax on spot currency conversions. The intention was to remove the incentive for short term "round trip" foreign exchange transactions after the collapse of the Bretton Woods system in 1971.

The question is whether this concept can usefully be extended to trades in stocks, bonds and derivatives. There seems to me to be a real danger in applying what seem to be "common sense" concepts to very complex global economic models.

It is true that the idea was supported by Gordon Brown... but equally it was dropped by him fairly quickly after being slapped down by the US and others when he raised it at the G20 finance ministers meeting last year.

Any measure of this kind would really need to be global and, whilst I can see the policital mileage for UK parties in the run-up to a general election, if the US and Russia don't support it then it is difficult to see it ever being implemented.

The other thing that concerns me is that Tobin was, after all, an extremely gifted economist and there seems to be little detail available about the economic thinking behind the extended "Robin Hood" tax.

I can only really draw two conclusions so far.

First, the Robin Hood Tax site is a slick piece of internet marketing and I suspect it will hit a very broad audience with the help of social media and a big traditional media push (for example, the Radio 4 interview with Bill Nighy this afternoon).

Second, I need to see some more solid economic thinking and debate around the issue. A nice website and 3 minutes and 25 seconds of Bill Nighy is not enough to form a reasoned opinion.

If you have made up your mind then let me know what you think.