Within the framework of the discussion of a tax reform, which allows Chile to improve its collection, a group of deputies from the ruling party has added an indication to the project to include a tax on financial transactionscolloquially called tax “Robin Hood”. the same would consist of a tax of 0.6% and is based on an initiative from 1971, published by the American economist and Nobel Prize winner James Tobin. For the latter, this type of proposal has also taken the name of tobin Tax, on an international level.
The initiative of the legislators details that the tobin tax proposal “taxes an economic activity of buying and selling financial instruments outside the real economy”. The financial flow and its actions would be taxed, not its results (profits or losses) or equity.
According to the deputies who added this indication to the tax reform bill, the State could collect between US$2,000 and US$4,000 million, depending on the rate that is finally appliedin case the tribute is added and the law is enacted.
The ruling legislator Jaime Orange, promoter of the Tobin tax in Chile, ensures that such a tax would affect only the richest 1% of the Chilean population. “For every 1,000 pesos that move in the stock market, 6 pesos of tax would have to be paid. Today the purchase of shares is not taxed”, he justified.
It should be noted that the original proposal of the Government for the tax reform provided for a collection of 4.1% of GDP, but later that ratio fell to 3.6%, so it would seek to recover a part with this tax.
Controversies generated by the tax
Given the criticism received, The promoters of the “Robin Hood” tax point out that there are 32 countries that currently apply a tax on financial transactions, among which are: France, Germany, Switzerland, Italy, Brazil, India, China, South Africa, Japan, South Korea. South, Singapore and Hong Kong, among others.
“It would be a tax on a gross basis, which could have a fixed rate or a variable rate depending on the amount of the transaction.”, he explained to Bloomberg Line Rodrigo Benitezleading partner of BLTA – SW Chile.
“You cannot discriminate between who pays this tax or not, if they have greater wealth or who require funds to finance their expenses. This tax is based on the same principles as the Tax on stamps and stamps.”, he highlighted.
In fact, the Minister of Finance himself, Mario Marcelacknowledged that andThe Government is analyzing this proposalbut clarified that they have to ensure that there are no incompatibilities with the stamp and stamp tax, mentioned by Benítez.
Pros and cons
Among the points in favor of this type of tax, Benítez stressed that “It is very efficient in collecting”, considering that it is “applies to the total value of the transaction, without deducting any cost or expense”.
However, he also highlighted some cons:
- “The subsistence of both taxes (stamps and stamps plus the Robin Hood tax) would lead to double taxation in relation to the same tax baseBenitez pointed out.
- “It is a tax that discourages economic activity, insofar as any financial movement would be affected by this tax, therefore it would aggravate the situation of economic crisis. And it is contrary to the economic capacity, considering that its application is on a gross basis regardless of whether the operation has any profitability or not”, he added.
- “Does not discriminate by type of taxpayerbecause it affects equally those who have more and those who have less and require more financing”, he finally pointed out.
The Robin Hood tax returned to global public notoriety when many anti-globalization groups called for it to be applied in their countries in the early 2000s.
Tobin himself considered in his last years that his idea has been abused, given that originally the rate was only intended to curb the volatility of international exchange markets.
A few months before his death (in 2002) Tobin maintained in an interview with the German newspaper Der Spiegel: “I don’t have the slightest thing in common with the anti-globalization rioters. I am a supporter of free trade.
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What is the “Robin Hood” tax and why is it analyzed in Chile?
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