UK in Robin Hood Tax blunder?

We all know the old saying, 'Never look a gift horse in the mouth' - well the UK appears to be doing just that by opposing a small EU-wide tax on financial transactions that could raise billions to tackle climate change, poverty and cuts to public services.

The Robin Hood tax - the name of the campaign in the UK that Friends of the Earth is part of - has gathered support from all corners of society, including economists like Nobel Prize-winners Joseph Stiglitz and Paul Krugman, business leaders like the Financial Services Authority Chairman Lord Adair Turner and world leaders like President Sarkozy of France and Chancellor Merkel of Germany.

While a global tax is the ultimate goal - and one that is being pushed for at this November's G20 - an EU-wide tax is still predicted to raise €57 billion. The UK's argument that it represents a tax on London (as 80 per cent of taxable transactions happen in the capital) misses the reason behind it: as the BBC's Robert Peston rightly points out, the trade in financial derivatives does not serve society, but rather lines the pockets of traders. He also points to a report by "the central bankers' central bank", the Bank for International Settlements, which shows the negative impact a large financial sector has on manufacturing. If even the banker's bank is saying it, then surely this is something we should be paying attention to, especially if this government is going to create the promised jobs and development within our renewables industry. Opposing the tax only further underlines the grip the banking industry has over this country, despite the mess they got us into, and are definitely not getting us out of.

So it's a win-win: we can reform some seriously questionable banking practices while raising money to be spent on tackling the deficit, global poverty and also climate change. The European Commission have proposed that 20 per cent of funds will be spent on climate-related activities, which, while short of the 25 per cent proposed by Robin Hood, is still a positive start. But we have to make sure that these funds are additional, providing extra finance rather than just replacing current commitments or allowing the UK to shirk its responsibilities. So far, what little money that has materialised to enable poor countries to develop while dealing with climate change has come from money already promised for aid, or recently in the form of loans which have to be paid back.

There's no doubt that addressing the planetary emergency and transforming the way we use energy and resources is going to need a massive amount of funds, and a financial transaction tax is one of the many ways to fund it. So if this government wants to show it is serious about tackling climate change as well as poverty eradication and cutting the deficit, it needs to stop staring at this gift horse and back an EU-wide financial transaction tax.