Bernard Hickey: Hero in the wings

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Opinion

Folk heroes become most popular in times of stress, particularly when the baddies seem to be winning. No one is seen as more heroic to working people than Robin Hood. He took from the evil Prince John and gave to the poor.

That's one reason, no doubt, why campaigners in Europe for a financial transactions tax call it the Robin Hood Tax.

If you want to find out more and have a laugh at the same time, google "Bill Nighy" and "Robin Hood Tax" to watch a YouTube video that was scripted by Richard Curtis of Four Weddings and a Funeral and Blackadder fame.

Called The Banker, it was made as part of a campaign started just after the Lehman Brothers crisis in 2008 and the near-meltdown of the global financial system.

The plan is for a tax of 0.05 per cent or 0.1 per cent to be paid on each financial transaction in wholesale bond, stock and foreign exchange markets.

Some estimate it could raise tens of billions of dollars in revenue. The idea has been around since the early 1970s and is also often called a Tobin Tax, after economist James Tobin. Initially the Robin Hood Tax idea didn't get much traction.

Bankers and many governments opposed it, being reluctant to stress the banks in the aftermath of the Lehman crisis. Britain and America are still opposed to the idea.

But the mood has changed this year as outrage has spread about how much of taxpayers' money was used to bail out banks and how many of the bankers have sailed merrily along paying each other millions of dollars in bonuses while taking big risks with government guarantees.

Also, governments are becoming increasingly cash-strapped and voters have lost no love on investment bankers who appear to have created so much mayhem in financial markets.

The concerted backing of the idea by France and Germany has given it a real push. They are now seeking a discussion of such a tax at the key G20 meeting in November.

This is where it gets interesting for New Zealand and Prime Minister John Key.

A former currency trader, Key has also dismissed the idea as unworkable and not on the agenda.

But it could be on the agenda fairly soon, because Australia is a member of the G20 and Prime Minister Julia Gillard will be at the meeting. She has already been lobbied by the head of the EU, which is pushing hard for such a tax.

The big problem with a Robin Hood Tax is that all the major financial centres will have to agree to impose it, or trade will migrate to the country where the tax is not imposed.

Britain and America must agree, which seems remote at present. But the public mood is turning ugly on both sides of the Atlantic as growth fails to fire and the realisation sets in that financial market volatility, often caused by heavy trading by hedge funds and banks, is a factor in the economic slump.

Ultimately, a Robin Hood Tax is a great way to reduce budget deficits and some of the risk-taking on financial markets. It is also politically popular.

If Australia goes with the tax, New Zealand would seem to have no choice but follow.

Robin Hood will be one folk hero to watch closely over the next year.