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A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another. The tax is intended to put a penalty on short-term financial round-trip excursions into another currency.

Tobin suggested his currency transaction tax in 1972 in his Janeway Lectures at Princeton, shortly after the Bretton Woods system of monetary management ended in 1971.^[1] Prior to 1971, one of the chief features of the Bretton Woods system was an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold. Then, on August 15, 1971, United States President Richard Nixon announced that the United States dollar would no longer be convertible to gold, effectively ending the system. This action created the situation whereby the U.S. dollar became the sole backing of currencies and a reserve currency for the member states of the Bretton Woods system, leading the system to collapse in the face of increasing financial strain in that same year. In that context, Tobin suggested a new system for international currency stability, and proposed that such a system include an international charge on foreign-exchange transactions.

In 2001, in another context, just after "the nineties' crises in Mexico, Southeast Asia and Russia,"^[2] which included the 1994 economic crisis in Mexico, the 1997 Asian Financial Crisis, and the 1998 Russian financial crisis, Tobin summarized his idea:

The tax on foreign exchange transactions was devised to cushion exchange rate fluctuations. The idea is very simple: at each exchange of a currency into another a small tax would be levied - let's say, 0.5% of the volume of the transaction. This dissuades speculators as many investors invest their money in foreign exchange on a very short-term basis. If this money is suddenly withdrawn, countries have to drastically increase interest rates for their currency to still be attractive. But high interest is often disastrous for a national economy, as the nineties' crises in Mexico, Southeast Asia and Russia have proven. My tax would return some margin of manoeuvre to issuing banks in small countries and would be a measure of opposition to the dictate of the financial markets.^{[3][4][5][6][7]}

Though James Tobin suggested the rate as "let's say 0.5%", in that interview setting, others have tried to be more precise in their search for the optimum rate.

Concepts and definitions[link]

Tobin's concept[link]

James Tobin's purpose in developing his idea of a currency transaction tax was to find a way to manage exchange-rate volatility. In his view, "currency exchanges transmit disturbances originating in international financial markets. National economies and national governments are not capable of adjusting to massive movements of funds across the foreign exchanges, without real hardship and without significant sacrifice of the objectives of national economic policy with respect to employment, output, and inflation.”^[1]

Tobin saw two solutions to this issue. The first was to move “toward a common currency, common monetary and fiscal policy, and economic integration.”^[1] The second was to move “toward greater financial segmentation between nations or currency areas, permitting their central banks and governments greater autonomy in policies tailored to their specific economic institutions and objectives.”^[1] Tobin’s preferred solution was the former one but he did not see this as politically viable so he advocated for the latter approach: “I therefore regretfully recommend the second, and my proposal is to throw some sand in the wheels of our excessively efficient international money markets.”^[1]

Tobin’s method of “throwing sand in the wheels” was to suggest a tax on all spot conversions of one currency into another, proportional to the size of the transaction. He said:

It would be an internationally agreed uniform tax, administered by each government over its own jurisdiction. Britain, for example, would be responsible for taxing all inter-currency transactions in Eurocurrency banks and brokers located in London, even when sterling was not involved. The tax proceeds could appropriately be paid into the IMF or World Bank. The tax would apply to all purchases of financial instruments denominated in another currency---from currency and coin to equity securities. It would have to apply, I think, to all payments in one currency for goods, services, and real assets sold by a resident of another currency area. I don't intend to add even a small barrier to trade. But I see offhand no other way to prevent financial transactions disguised as trade.^[1]

In the development of his idea, Tobin was influenced by the earlier work of John Maynard Keynes on general financial transaction taxes:

I am a disciple of Keynes, and he, in his famous chapter XII of the General Theory on Employment Interest and Money, had already prescribed a tax on transactions, with the aim of linking investors to their actions in a lasting fashion. In 1971 I transferred this idea to exchange markets.^[3][4]

Keynes' concept stems from 1936 when he proposed that a transaction tax should be levied on dealings on Wall Street, where he argued that excessive speculation by uninformed financial traders increased volatility. For Keynes (who was himself a speculator) the key issue was the proportion of 'speculators' in the market, and his concern that, if left unchecked, these types of players would become too dominant.^[8] Keynes writes:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation. (,^[8] p. 104)

The introduction of a substantial government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States. (,^[8] p. 105)

Variations on Tobin tax idea[link]

The Spahn tax[link]

According to Paul Bernd Spahn in 1995, "Analysis has shown that the Tobin tax as originally proposed is not viable and should be laid aside for good." Furthermore, he said:

"...it is virtually impossible to distinguish between normal liquidity trading and speculative "noise" trading. If the tax is generally applied at high rates, it will severely impair financial operations and create international liquidity problems, especially if derivatives are taxed as well. A lower tax rate would reduce the negative impact on financial markets, but not mitigate speculation where expectations of an exchange rate change exceed the tax margin."^[9]

Spahn suggested an alternative involving

"...a two-tier rate structure consisting of a low-rate financial transactions tax, plus an exchange surcharge at prohibitive rates as a piggyback. The latter would be dormant in times of normal financial activities, and be activated only in the case of speculative attacks. The mechanism allowing the identification of abnormal trading in world financial markets would make reference to a "crawling peg" with an appropriate exchange rate band. The exchange rate would move freely within this band without transactions being taxed. Only transactions effected at exchange rates outside the permissible range would become subject to tax. This would automatically induce stabilizing behavior on the part of market participants."^[9]

Special Drawing Rights[link]

On September 19, 2001, retired speculator George Soros put forward a proposal, special drawing rights (SDRs) that the rich countries would pledge for the purpose of providing international assistance, without necessarily dismissing the Tobin tax idea. He stated, "I think there is a case for a Tobin tax ... (but) it is not at all clear to me that a Tobin tax would reduce volatility in the currency markets. It is true that it may discourage currency speculation but it would also reduce the liquidity of the marketplace." ^[10]

Scope of the Tobin concept[link]

The term "Tobin tax" has sometimes been used interchangeably with a specific currency transaction tax (CTT) in the manner of Tobin's original idea, and other times it has been used interchangeably with the various different ideas of a more general financial transaction tax (FTT). In both cases, the various ideas proposed have included both national and multinational concepts.

A 2001 example of its association with the specific currency transaction tax is shown here:

"The concept of a Tobin tax has experienced a resurgence in the discussion on reforming the international financial system. In addition to many legislative initiatives in favour of the Tobin tax in national parliaments, possible ways to introduce a Tobin-style currency transaction tax (CTT) are being scrutinised by the United Nations."^[11]

A 2009 example of its association with a general financial transaction tax is shown here:

"European Union leaders urged the International Monetary Fund on Friday to consider a global tax on financial transactions in spite of opposition from the US and doubts at the IMF itself. In a communiqué issued after a two-day summit, the EU’s 27 national leaders stopped short of making a formal appeal for the introduction of a so-called “Tobin tax” but made clear they regarded it as a potentially useful revenue-raising instrument."^[12]

Evaluating the Tobin tax as a Currency Transaction Tax (CTT)[link]

See also Evaluating the Tobin tax as a general Financial Transaction Tax

Are different players in the economy operating at cross purposes to each other?[link]

In 1994, Canadian economist Rodney Schmidt noted that

in two-thirds of all the outright forward and [currency] swap transactions, the money moved into another currency for fewer than seven days. In only 1 per cent did the money stay for as long as one year. While the volatile exchange rates caused by all this rapid movement posed problems for national economies, it was the bread and butter of those playing the currency markets. Without constant fluctuations in the currency markets, Schmidt noted, there was little opportunity for profit.^[13]

This certainly seemed to suggest the interests of currency traders and the interests of ordinary citizens [in national economies] were operating at cross-purposes.^[13]

Schmidt also noted another interesting aspect of the foreign- exchange market: The dominant players were the private banks, which had huge pools of capital and access to information about currency values. Since much of the market involved moving large sums of money (typically in the tens of millions of dollars) for very short periods of time (often less than a day), banks were perfectly positioned to participate. Among swap transactions, which represented a major chunk of the foreign exchange market, 86 per cent of the transactions were actually between banks.^[13]

Stability, volatility and speculation[link]

The appeal of stability to many players in the world economy[link]

In 1972, Tobin examined the global monetary system that remained after the Bretton Woods monetary system was abandoned. This examination was subsequently revisited by other analysts, such as Ellen Frank, who, in 2002 wrote: "If by globalization we mean the determined efforts of international businesses to build markets and production networks that are truly global in scope, then the current monetary system is in many ways an endless headache whose costs are rapidly outstripping its benefits."^[14] She continues with a view on how that monetary system stability is appealing to many players in the world economy, but is being undermined by volatility and fluctuation in exchange rates: "Money scrambles around the globe in quest of the banker’s holy grail – sound money of stable value – while undermining every attempt by cash-strapped governments to provide the very stability the wealthy crave."^[14]

Frank then corroborates Tobin's comments on the problems this instability can create (e.g. high interest rates) for developing countries such as Mexico (1994), countries in South East Asia (1997), and Russia (1998).^[2] She writes, "Governments of developing countries try to peg their currencies, only to have the peg undone by capital flight. They offer to dollarize or euroize, only to find themselves so short of dollars that they are forced to cut off growth. They raise interest rates to extraordinary levels to protect investors against currency losses, only to topple their economies and the source of investor profits. ... IMF bailouts provide a brief respite for international investors but they are, even from the perspective of the wealthy, a short-term solution at best ... they leave countries with more debt and fewer options."^[14]

Effect on volatility[link]

One of the main economic hypotheses raised in favor of financial transaction taxes is that such taxes reduce return volatility, leading to an increase of long-term investor utility or more predictable levels of exchange rates. The impact of such a tax on volatility is of particular concern because the main justification given for this tax by Tobin was to improve the autonomy of macroeconomic policy by curbing international currency speculation and its destabilizing effect on national exchange rates.^[1] Economist Korkut Erturk states:

if the Tobin Tax is not stabilizing, then much of the rest of the discussion on its feasibility and other related issues are probably moot.^[15]

Theoretical models[link]

Most studies of the likely impact of the Tobin tax on financial markets volatility have been theoretical—researches conducted laboratory simulations or constructed economic models. Some of these theoretical studies have concluded that a transaction tax could reduce volatility by crowding out speculators^[16] or eliminating individual 'noise traders'^[17] but that it 'would not have any impact on volatility in case of sufficiently deep global markets such as those in major currency pairs,^[15] unlike in case of less liquid markets, such as those in stocks and (especially) options, where volatility would probably increase with reduced volumes.^[18][19] Behavioral finance theoretical models, such as those developed by Wei and Kim (1997)^[20] or Westerhoff and Dieci (2006)^[21] suggest that transaction taxes can reduce volatility, at least in the foreign exchange market. In contrast, some papers find a positive effect of a transaction tax on market volatility.^[22][23] Lanne and Vesala (2006) argue that a transaction tax "is likely to amplify, not dampen, volatility in foreign exchange markets", because such tax penalises informed market participants disproportionately more than uninformed ones, leading to volatility increases.^[24]

Empirical studies[link]

In most of the available empirical studies however, no statistically significant causal link has been found between an increase in transaction costs (transaction taxes or government-controlled minimum brokerage commissions) and a reduction in volatility—in fact a frequent unintended consequence observed by 'early adopters' after the imposition of a financial transactions tax (see Werner, 2003)^[25] has been an increase in the volatility of stock market returns, usually coinciding with significant declines in liquidity (market volume) and thus in taxable revenue (Umlauf, 1993).^[26]

For a recent evidence to the contrary, see, e.g., Liu and Zhu (2009),^[27] which may be affected by selection bias given that their Japanese sample is subsumed by a research conducted in 14 Asian countries by Hu (1998),^[28] showing that "an increase in tax rate reduces the stock price but has no significant effect on market volatility". As Liu and Zhu (2009) point out, [...] the different experience in Japan highlights the comment made by Umlauf (1993) that it is hazardous to generalize limited evidence when debating important policy issues such as the STT [securities transaction tax] and brokerage commissions."

See also "Tobin tax proponents response to empirical evidence on volatility"

Historical attempts to reduce speculation via fixed exchange rates[link]

Matthew Sinclair, Research Director of TaxPayers' Alliance, notes that

one reason why few have supported a Tobin tax is that worries about foreign exchange speculation have slowly subsided as more countries have moved towards floating exchange rates, which do more to limit the potential for exchange rate speculation than a Tobin tax possibly could. Attempts to fix rates such as – in the 1980s and 1990s – the European Exchange Rate Mechanism (ERM) meant that we got large and sudden movements in exchange rates when speculators sensed that a peg could not be maintained, rather than the more fluid shifts of today.^[29]

Is there an optimum Tobin tax rate?[link]

When James Tobin was interviewed by Der Spiegel in 2001, the tax rate he suggested was 0.5%.^[4][5][6] His use of the phrase "let's say" ("sagen wir") indicated that he was not, at that point, in an interview setting, trying to be precise. Others have tried to be more precise or practical in their search for the Tobin tax rate.

Tax rates of the magnitude of 0.1%-1% have been proposed by normative economists, without addressing how practicable these would be to implement. In positive economics studies however, where due reference was made to the prevailing market conditions, the resulting tax rates have been significantly lower.^{[citation needed]}

According to Garber (1996), competitive pressure on transaction costs (spreads) in currency markets has reduced these costs to fractions of a basis point. For example the EUR.USD currency pair trades with spreads as tight as 1/10 of a basis point, i.e. with just a 0.00001 difference between the bid and offer price, so "a tax on transactions in foreign exchange markets imposed unilaterally, 6/1000 of a basis point (or 0.00006%) is a realistic maximum magnitude."^[30] Similarly Shvedov (2004) concludes that "even making the unrealistic assumption that the rate of 0.00006% causes no reduction of trading volume, the tax on foreign currency exchange transactions would yield just $4.3 billion a year, despite an annual turnover in dozens of trillion dollars.^[31]

Accordingly, one of the modern Tobin tax versions, called the Sterling Stamp Duty, sponsored by certain UK charities, has a rate of 0.005% "in order to avoid market distortions", i.e., 1/100 of what Tobin himself envisaged in 2001. Sterling Stamp Duty supporters argue that this tax rate would not adversely affect currency markets and could still raise large sums of money.^[32]

The same rate of 0.005% was proposed for a currency transactions tax (CTT) in a report prepared by Rodney Schmidt for The North-South Institute (a Canadian NGO whose "research supports global efforts to [..] improve international financial systems and institutions").^[33] Schmidt (2007) used the observed negative relationship between bid-ask spreads and transactions volume in foreign exchange markets to estimate the maximum "non-disruptive rate" of a currency transaction tax. A CTT tax rate designed with a pragmatic goal of raising revenue for various development projects, rather than to fulfill Tobin's original goals (of "slowing the flow of capital across borders" and "preventing or managing exchange rate crises"), should avoid altering the existing "fundamental market behavior", and thus, according to Schmidt, must not exceed 0.00005, i.e., the observed levels of currency transactions costs (bid-ask spreads).^[34]

The mathematician Paul Wilmott has pointed out that while perhaps some trading ought to be discouraged, trading for the hedging of derivatives is generally considered a good thing in that it can reduce risk, and this should not be punished. He estimates that any financial tax should be at most one basis point so as to have negligible effect on hedging.^[35]

Assuming that all currency market participants incur the same maximum level of transaction costs (the full cost of the bid-ask spread), as opposed to earning them in their capacity of market makers, and assuming that no untaxed substitutes exist for spot currency markets transactions (such as currency futures and currency exchange traded funds), Schmidt (2007) finds that that a CTT rate of 0.00005 would be nearly volume-neutral, reducing foreign exchange transaction volumes by only 14%. Such volume-neutral CTT tax would raise relatively little revenue though, estimated at around $33 bn annually, i.e., an order of magnitude less than the "carbon tax [which] has by far the greatest revenue-raising potential, estimated at $130-750 bn annually." The author warns however that both these market-based revenue estimates "are necessarily speculative", and he has more confidence in the revenue-raising potential of "The International Finance Facility (IFF) and International Finance Facility for Immunisation (IFFIm)."^[34]

In 2000, a representative of another "pro-Tobin tax" non-governmental organization stated that Tobin's idea was

to ‘throw some sand in the wheels’ of speculative flows. For a currency transaction to be profitable [to the speculator], the change in value of the currency must be greater than the proposed tax. Since speculative currency trades occur on much smaller margins, the Tobin Tax would reduce or eliminate the profits and, logically, the incentive to speculate. The tax is designed to help stabilize exchange rates by reducing the volume of speculation. And it is set deliberately low so as not to have an adverse effect on trade in goods and services or long-term investments.^[36]

Is the tax easy to avoid?[link]

Technical feasibility[link]

Although Tobin had said his own tax idea was unfeasible in practice, Joseph Stiglitz, former Senior Vice President and Chief Economist of the World Bank, said, on October 5, 2009, that modern technology meant that was no longer the case. Stiglitz said, the tax is "much more feasible today" than a few decades ago, when Tobin recanted.^[37]

However, on November 7, 2009, at the G20 finance ministers summit in Scotland, Dominique Strauss-Khan, head of the International Monetary Fund, said "transactions are very difficult to measure and so it's very easy to avoid a transaction tax."^[38]

Nevertheless in early December 2009, economist Stephany Griffith-Jones agreed that the "greater centralisation and automisation of the exchanges and banks clearing and settlements systems ... makes avoidance of payment more difficult and less desirable."^[39]

In January, 2010, feasibility of the tax was supported and clarified by researchers Rodney Schmidt, Stephan Schulmeister and Bruno Jetin who noted “it is technically easy to collect a financial tax from exchanges ... transactions taxes can be collected by the central counterparty at the point of the trade, or automatically in the clearing or settlement process."^[40][41] (All large-value financial transactions go through three steps. First dealers agree to a trade; then the dealers’ banks match the two sides of the trade through an electronic central clearing system; and finally, the two individual financial instruments are transferred simultaneously to a central settlement system. Thus a tax can be collected at the few places where all trades are ultimately cleared or settled.)^[41][42]

When presented with the problem of speculators shifting operations to offshore tax havens, a representative of a “pro Tobin tax” NGO argued as follows:

Agreement between nations could help avoid the relocation threat, particularly if the tax were charged at the site where dealers or banks are physically located or at the sites where payments are settled or ‘netted’. The relocation of Chase Manhattan Bank to an offshore site would be expensive, risky and highly unlikely – particularly to avoid a small tax. Globally, the move towards a centralized trading system means transactions are being tracked by fewer and fewer institutions. Hiding trades is becoming increasingly difficult. Transfers to tax havens like the Cayman Islands could be penalized at double the agreed rate or more. Citizens of participating countries would also be taxed regardless of where the transaction was carried out.^[36]

Based on digital technology, a new form of taxation, levied on bank transactions, was successfully used in Brazil from 1993 to 2007 and proved to be evasion-proof, more efficient and less costly than orthodox tax models. In his book, Bank transactions: pathway to the single tax ideal, Marcos Cintra carries out a qualitative and quantitative in-depth comparison of the efficiency, equity and compliance costs of a bank transactions tax relative to orthodox tax systems, and opens new perspectives for the use of modern banking technology in tax reform across the world.^[43]

How many nations are needed to make it feasible?[link]

There has been debate as to whether one single nation could unilaterally implement a "Tobin tax." Speaking to this question, Schmidt states,

"It is possible for a single country to apply a securities transaction tax unilaterally without significant capital flight to exchanges in other jurisdictions. There are many examples of such taxes already in existence. Britain levies a "Stamp Duty", a 0.5% tax on purchases of shares of UK companies whether the transaction occurs in the UK or overseas. Such specific financial transaction taxes exist in Austria, Greece, Luxembourg, Poland, Portugal, Spain, Switzerland, Hong Kong, China and Singapore. The state of New York levies a stamp duty on trades taking place on both the New York Stock Exchange and on NASDAQ."^[42]

In the year 2000, "eighty per cent of foreign-exchange trading [took] place in just seven cities. Agreement [to implement the tax] by [just three cities,] London, New York and Tokyo alone, would capture 58 per cent of speculative trading."^[36]

Evaluating the Tobin tax as a general Financial Transaction Tax (FTT)[link]

Sweden's experience in implementing Tobin taxes in the form of general financial transaction taxes[link]

In July, 2006, analyst Marion G. Wrobel examined the actual international experiences of various countries in implementing financial transaction taxes.^[44] Wrobel's paper highlighted the Swedish experience with financial transaction taxes. In January 1984, Sweden introduced a 0.5% tax on the purchase or sale of an equity security. Thus a round trip (purchase and sale) transaction resulted in a 1% tax. In July 1986 the rate was doubled. In January 1989, a considerably lower tax of 0.002% on fixed-income securities was introduced for a security with a maturity of 90 days or less. On a bond with a maturity of five years or more, the tax was 0.003%.

The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million.^[45] In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kronor by 1988.^[46]

On the day that the tax was announced, share prices fell by 2.2%. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement. When the tax was doubled, prices again fell by another 1%. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.

Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s.

Tobin tax proponents reaction to the Swedish experience[link]

The Swedish experience of a transaction tax was with purchase or sale of equity securities, fixed income securities and derivatives. In global international currency trading, however, the situation could, some argue, look quite different. In 2000, Round argued as follows:

[The Tobin tax] could boost world trade by helping to stabilize exchange rates. Wildly fluctuating rates play havoc with businesses dependent on foreign exchange as prices and profits move up and down, depending on the relative value of the currencies being used. When importers and exporters can’t be certain from one day to the next what their money is worth, economic planning – including job creation – goes out the window. Reduced exchange-rate volatility means that businesses would need to spend less money ‘hedging’ (buying currencies in anticipation of future price changes), thus freeing up capital for investment in new production.^[36]

Wrobel's studies do not address the global economy as a whole, as James Tobin did when he spoke of "the nineties' crises in Mexico, South East Asia and Russia,"^[7][47] which included the 1994 economic crisis in Mexico, the 1997 Asian Financial Crisis, and the 1998 Russian financial crisis.

Who would gain and who would lose if the Tobin tax (FTT) were implemented?[link]

Views of ABAC (APEC Business Advisory Council) expressed in open letter to IMF[link]

The APEC Business Advisory Council, the business representatives' body in APEC, which is the forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region, expressed its views in a letter to the IMF on 15 February 2010. The APEC Business Advisory Council stated:

We believe that imposition of a global tax is an inappropriate response and a further burden to industries, especially small and medium enterprises, and consumers in the wake of the global financial crisis. We also believe that the proposals under consideration would be harmful for a range of additional reasons, including the practical challenges of implementing any such tax.^[48]

In addition, ABAC expressed further concerns in the letter:-

• Key to the APEC agenda is reduction of transaction costs. The proposal is directly counterproductive to this goal.
• It would have a very significant negative impact on real economic recovery, as these additional costs are likely to further reduce financing of business activities at a time when markets remain fragile and prospects for the global economy are still uncertain.
• Industries and consumers as a whole would be unfairly penalized.
• It would further weaken financial markets and reduce the liquidity, particularly in the case of illiquid assets.
• Effective implementation would be virtually impossible, especially as opportunities for cross-border arbitrage arise from decisions of certain jurisdictions not to adopt the tax or to exempt particular activities.
• There is no global consensus why a tax is needed and what the revenue would be used for, and therefore no understanding how much is needed. Any consequential tax would need to be supported by clear consensus for its application.

Note - APEC's 21 Member Economies are Australia, Brunei Darussalam, Canada, Chile, People's Republic of China, Hong Kong, China, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, The Republic of the Philippines, The Russian Federation, Singapore, Chinese Taipei, Thailand, United States of America, Viet Nam.

Views of the ITUC/APLN (Asia-Pacific Labour Network) expressed in their statement to the 2010 APEC Economic Leaders Meeting[link]

The International Trade Union Confederation/Asia-Pacific Labour Network (ITUC/APLN), the informal trade union body of the Asia-Pacific, supported the Tobin Tax in their Statement to the 2010 APEC Economic Leaders Meeting. The representatives of APEC's national trade unions centers also met with the Japanese Prime Minister, Naoto Kan, the host Leader of APEC for 2010, and called for the Prime Minister's support on the Tobin Tax.^[49]

The ITUC/APLN stated:

APEC Leaders should support measures that will downsize the financial sector and return it to its legitimate function of serving the real economy. Instead of fiscal austerity policies and increased expenditure cuts APEC economies should exploit new sources of finance, such as the Financial Transactions Tax (FTT), and raise more revenue with progressive tax systems.^[49]

The ITUC shares its support for Tobin Tax with the Trade Union Advisory Council (TUAC), the official OECD trade union body, in a research^[50] on the feasibility, strengths and weaknesses of a potential Tobin Tax. ITUC, APLN and TUAC refer to Tobin Tax as the Financial Transactions Tax.

Would 'regular investors like you and me' lose?[link]

An economist speaking out against the common belief that investment banks would bear the burden of a Tobin tax is Simon Johnson, Professor of Economics at the MIT and a former Chief Economist at the IMF, who in a BBC Radio 4 interview discussing banking system reforms presented his views on the Tobin tax

Evan Davis, BBC Radio 4:

There are various ideas around, aren't there, one of them is a Tobin tax, it's been associated with the [British] Prime Minister—a tax on global financial transactions. Is that a response, do you think, to the problems created by large banks and big bail-outs?

Prof. Simon Johnson:

I think it's hmm... partially a response, or an attempt to respond, that's not my preferred [...] approach to the problem, I think that would lead to a lot of distortions, a lot of moving of activities offshore. If you did it at the full level of the G20, you might be able to get some traction. Evasion at that level would be hard. But still I think it doesn't address the core problem which is really about financial institutions that are 'Too Big to Fail'. Financial transaction tax is more of a tax on regular people like you and me.^[51][52]

Let Wall Street Pay for the Restoration of Main Street Bill[link]

In 2009, U.S. Representative Peter DeFazio of Oregon proposed a financial transaction tax in his "Let Wall Street Pay for the Restoration of Main Street Bill". (This was proposed domestically for the United States only.)^[53]

Would there be net job losses if a FTT tax was introduced?[link]

Schwabish (2005) examined the potential effects of introducing a stock transaction (or "transfer") tax in a single city (New York) on employment not only in the securities industry, but also in the supporting industries. A financial transactions tax would lead to job losses also in non-financial sectors of the economy through the so called multiplier effect forwarding in a magnified form any taxes imposed on Wall Street employees through their reduced demand to their suppliers and supporting industries. The author estimated the ratios of financial- to non-financial job losses of between 10:1 to 10:4, that is "a 10 percent decrease in securities industry employment would depress employment in the retail, services, and restaurant sectors by more than 1 percent; in the business services sector by about 4 percent; and in total private jobs by about 1 percent."^[54]

It is also possible to estimate the impact of a reduction in stock market volume caused by taxing stock transactions on the rise in the overall unemployment rate. For every 10 percent decline in stock market volume, elasticities estimated by Schwabish^[54] implied that a stock transaction ("transfer") tax could cost New York City between 30,000 and 42,000 private-sector jobs, and if the stock market volume reductions reached levels observed by Umlauf (1993) in Sweden after a stock FTT was introduced there ("By 1990, more than 50% of all Swedish trading had moved to London")^[26] then according to Schwabish (2005), following an introduction of a FTT tax, there would be 150,000-210,000 private-sector jobs losses in the New York alone.

In 2000, Round argued as follows:

When importers and exporters can’t be certain from one day to the next what their money is worth, economic planning—including job creation—goes out the window. Reduced exchange-rate volatility means that businesses would need to spend less money ‘hedging’ (buying currencies in anticipation of future price changes), thus freeing up capital for investment in new production [and the accompanying new jobs].^[36]

The cost of currency hedges—and thus "certainty what importers and exporters' money is worth"—has nothing to do with volatility whatsoever, as this cost is exclusively determined by the interest rate differental between two currencies. Nevertheless, as Tobin said, "If ... [currency] is suddenly withdrawn, countries have to drastically increase interest rates for their currency to still be attractive."^[3][4]

Is there an optimum tax rate?[link]

Financial transaction tax rates of the magnitude of 0.1%-1% have been proposed by normative economists, without addressing the practicability of implementing a tax at these levels. In positive economics studies however, where due reference was paid to the prevailing market conditions, the resulting tax rates have been significantly lower.

For instance, Edwards (1993) concluded that if the transaction tax revenue from taxing the futures markets were to be maximized (see Laffer curve), with the tax rate not leading to a prohibitively large increase in the marginal cost of market participants, the rate would have to be set so low that "a tax on futures markets will not achieve any important social objective and will not generate much revenue."^[55]

Political opinion[link]

Opinions are divided between those who applaud that the Tobin tax could protect countries from spillovers of financial crises, and those who claim that the tax would also constrain the effectiveness of the global economic system, increase price volatility, widen bid-ask spreads for end users such as investors, savers and hedgers, and destroy liquidity.

Tobin tax proponents response to empirical evidence on volatility[link]

Lack of direct supporting evidence for stabilizing (volatility-reducing) properties of Tobin-style transaction taxes in econometric research is acknowledged by some of the Tobin tax supporters:

Ten studies report a positive relationship between transaction taxes and short-term price volatility, five studies did not find any significant relationship. (Schulmeister et al, 2008, p. 18).^[56]

These Tobin tax proponents have to therefore rely on indirect evidence in their favor, reinterpreting studies which do not deal directly with volatility, but instead with trading volume (with volume being generally reduced by transaction taxes, though it constitutes their tax base, see: negative feedback loop). This allows these Tobin tax proponents to state that "some studies show (implicitly) that higher transaction costs might dampen price volatility. This is so because these studies report that a reduction of trading activities is associated with lower price volatility." So if a study finds that reducing trading volume or trading frequency reduces volatility, these Tobin tax supporters combine it with the observation that Tobin-style taxes are volume-reducing, and thus should also indirectly reduce volatility ("this finding implies a negative relationship between [..] transaction tax [..] and volatility, because higher transaction costs will 'ceteris paribus' always dampen trading activities)." (Schulmeister et al., 2008, p. 18).^[56]

There is yet another reason why some proponents of the Tobin tax maintain that it can reduce volatility, despite prevailing empirical evidence to the contrary. This is possible, because some Tobin tax supporters created a concept of a separate, custom-defined volatility. Rather than adopting one of the standard statistical definitions (e.g., conditional variance of returns, see Engle, 1982 ^[57]) leading economists favoring the Tobin tax prefer to define volatility as a "long-term overshooting of speculative prices" (see Tobin, 1978 ^[58] and Eichengreen, Tobin and Wyplosz, 1995 ^[59]). Evidence about this special type of volatility is missing and this is why some of the proponents, instead of conducting their own tests, prefer to blame financial econometric researchers for not addressing their special needs:

Unfortunately, all empirical studies on the relationship between transaction costs, trading volume and price volatility in general, and on the possible effects of an FTT on volatility in particular, deal with short-term statistical volatility only. Therefore, the results of these studies cannot help to answer the question whether or not an FTT will mitigate misalignments of asset prices over the medium and long run.

—Schulmeister et al, 2008, p. 11^[56]

Thus the beneficial impact of transaction taxes on the "Tobin volatility" can co-exist as a valid economic theory even without direct supporting evidence from the statistical volatility research, simply because of the special volatility definition, which allows all economists defending the Tobin tax to escape Popperian falsifiability.^{[citation needed]}

Another shortcoming of all of the empirical volatility studies pointed out by some of the Tobin tax proponents is the lack of distinction between "basic" and "excessive" volatility, which "might have contributed to the contradictory and, hence, inconclusive results of these studies" (Schulmeister et al., 2008, p. 11-12).^[56] Unfortunately, no tests have been conducted so far, which would be able to operationalize "excessive" volatility assumed to exist by the Tobin tax theory (see Schulmeister et al., 2008, p. 11),^[56] therefore the acceptance of the Tobin-style transactions tax as a fiscal or monetary policy instrument requires clear understanding that basic theoretical phenomena underlying this tax, such as "excessive" volatility, still remain untested.

Should speculators be encouraged, penalized or dissuaded?[link]

The Tobin tax rests on the premise that speculators ought to be, as Tobin puts it, "dissuaded."^[4][5][6][7] This premise itself is a matter of debate: See main debate at main article on "speculation"..

Matthew Sinclair, Research Director of TaxPayers' Alliance, argues that "The whole idea of a Tobin tax is based on the flawed view that trading – or speculation – is a bad thing. The truth is that it isn’t: it helps the process of price discovery, makes markets work better, enhances liquidity, ensures that resources are priced correctly and generally helps oil the cogs of the global economy."^[29]

On the other side of the debate were the leaders of Germany who, in May 2008, planned to propose a worldwide ban on oil trading by speculators, blaming the 2008 oil price rises on manipulation by hedge funds. At that time India, with similar concerns, had already suspended futures trading of five commodities.^[60]

On December 3, 2009, US Congressman Peter DeFazio stated, "The American taxpayers bailed out Wall Street during a crisis brought on by reckless speculation in the financial markets, ... This [ proposed financial transaction tax ] legislation will force Wall Street to do their part and put people displaced by that crisis back to work."^[53]

On January 21, 2010, President Barack Obama endorsed the Volcker Rule which deals with proprietary trading of investment banks^[61] and restricts banks from making certain speculative kinds of investments if they are not on behalf of their customers.^[61] Former U.S. Federal Reserve Chairman Paul Volcker, President Obama's advisor, has argued that such speculative activity played a key role in the financial crisis of 2007–2010.

Volcker endorsed only the UK's tax on bank bonuses, calling it "interesting", but was wary about imposing levies on financial market transactions, because he is "instinctively opposed" to any tax on financial transactions.^[62]

Questions of volatility[link]

In February 2010, Tim Harford, writing in the Undercover Economist column of the Financial Times, commented directly on the claims of Keynes and Tobin that 'taxes on financial transactions would reduce financial volatility'.^[63] Harford wrote:-

This is possible but far from obvious, when you realise that the tax might encourage bigger, more irregular financial transactions. An analogy: if I have to pay a charge whenever I use a cash machine, I make fewer, larger withdrawals and the amount of money in my wallet fluctuates more widely. Bear in mind, too, that the most bubble-prone asset market is for housing, which is bought in very lumpy, long-term chunks. There isn’t much evidence as to whether transaction charges reduce volatility. What there is is mixed – but perhaps leaning against the Robin Hood tax. On the French stock market, coarser 'tick sizes' raise spreads and act like a tax: they increase volatility. Transaction taxes on Swedish stocks in the 1980s reduced prices and turnover but left volatility unchanged.

Comparing Currency Transaction Taxes (CTT) and Financial Transaction Taxes (FTT)[link]

Research evidence[link]

In 2003, researchers like Aliber et al. proposed that empirical evidence on the observed effects of the already introduced and abolished stock transaction taxes^[where?] and a hypothetical CTT (Tobin) can probably be treated interchangeably.^[64] They did not find any evidence on the differential effects of introducing or removing, stock transactions taxes or a hypothetical currency (Tobin) tax on any subset of markets or all markets.

Researchers have used models belonging to the GARCH family^[65][66][67] to describe both the volatility behavior of stock market returns and the volatility behavior of foreign exchange rates. This is used as evidence that the similarity between currencies and stocks in the context of a tax designed to curb volatility such as a CTT (or FTT in general) can be inferred from the almost identical (statistically indistinguishable) behavior of the volatilities of equity and exchange rate returns.

Practical considerations[link]

Hanke et al. state, "The economic consequences of introducing a [currency-only] Tobin Tax are [...] completely unknown, as such a tax has not been introduced on any real foreign exchange market so far".^[68] At the same time, even in the case of stock transaction taxes, where some empirical evidence is available, researchers warn that "it is hazardous to generalize limited evidence when debating important policy issues such as the transaction taxes".^[26][27]

According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek (2008), from the practical viewpoint it is no longer possible to introduce a non-currency transactions tax (even if foreign exchange transactions were formally exempt) since the advent of currency derivatives and currency exchange traded funds. All of these would have to be taxed together under a "non-currency" financial transactions tax (such as under certain proposals] in the U.S. in 2009 which, although not intending to tax currencies directly, would still do so due to taxation of currency futures and currency exchange traded funds). Because these three groups of instruments are nearly perfect substitutes, if at least one of these groups were to be exempt, it would likely attract most market volume from the taxed alternatives.^[69]

According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek (2008), restricting the financial transactions tax to foreign exchange only (as envisaged originally by Tobin) would not be desirable.^[69] Any "general FTT seems...more attractive than a specific transaction tax" (such as a currency-only Tobin tax), because it could reduce tax avoidance (i.e., substitution of similar untaxed instruments), could significantly increase the tax base and could be implemented more easily on organized exchanges than in a dealership market like the global foreign exchange market.^[69] (See also the discussion of tax avoidance as it relates to a currency transaction tax.)

On October 5, 2009, Joseph Stiglitz said that any new tax should be levied on all asset classes – not merely foreign exchange, and would be based on the gross value of the assets, thereby helping to discourage the creation of asset bubbles.^[37]

Original idea and alter-globalization movement[link]

Tobin's more specific concept of a "currency transaction tax" from 1972 lay dormant for more than 20 years but was revived by the advent of the 1997 Asian Financial Crisis. In December, 1997 Ignacio Ramonet, editor of Le Monde Diplomatique, renewed the debate around the Tobin tax with an editorial titled "Disarming the markets". Ramonet proposed to create an association for the introduction of this tax, which was named ATTAC (Association for the Taxation of financial Transactions for the Aid of Citizens). The tax then became an issue of the global justice movement or alter-globalization movement and a matter of discussion not only in academic institutions but even in streets and in parliaments in the UK, France, and around the world.

In an interview^[70] given to the Italian independent radio network Radio Popolare in July 2001 James Tobin distanced himself from the global justice movement. «There are agencies and groups in Europe that have used the Tobin Tax as an issue of broader campaigns, for reasons that go far beyond my proposal. My proposal was made into a sort of milestone for an antiglobalization program». James Tobin's interview with Radio Popolare was quoted by the Italian foreign minister at the time, former director-general of the World Trade Organisation Renato Ruggiero, during a Parliamentary debate on the eve of the G8 2001 summit in Genoa. Afterwards James Tobin distanced himself from the global justice movement ^[71][72] also in an interview given to Der Spiegel in 2001, and continued to state the validity of his proposal,

I have absolutely nothing in common with those anti-globalisation rebels. Of course I am pleased; but the loudest applause is coming from the wrong side. Look, I am an economist and, like most economists, I support free trade. Furthermore, I am in favour of the International Monetary Fund, the World Bank, the World Trade Organisation. They've hijacked my name. ... The tax on foreign exchange transactions was devised to cushion exchange rate fluctuations.^[4][5][6][7] (See last part of quote in the above lead section).

Tobin observed that, while his original proposal had only the goal of "putting a brake on the foreign exchange trafficking", the antiglobalization movement had stressed "the income from the taxes with which they want to finance their projects to improve the world". He declared himself not contrary to this use of the tax's income, but stressed that it was not the important aspect of the tax.

ATTAC and other organizations have recognized that while they still consider Tobin's original aim as paramount, they think the tax could produce funds for development needs in the South (such as the Millennium Development Goals),^[32] and allow governments, and therefore citizens, to reclaim part of the democratic space conceded to the financial markets.

In March, 2002, London School of Economics Professor Willem Buiter, who studied under James Tobin, wrote a glowing^{[peacock term]} obituary for the man,^[73] but also remarked that, "This [Tobin Tax] ... was in recent years adopted by some of the most determined enemies of trade liberalisation, globalisation and the open society." Buiter added, "The proposal to use the Tobin tax as a means of raising revenues for development assistance was rejected by Tobin, and he forcefully repudiated the anti-globalisation mantra of the Seattle crowd." In September 2009, Buiter also wrote in the Financial Times, "Tobin was a genius ... but the Tobin tax was probably his one daft idea".^[74]

In those same "years" that Buiter spoke of, the Tobin tax was also "adopted" or supported in varying degrees by the people who were not, as he put it, "enemies of trade liberalisation." Among them were several supporters from 1990 to 1999, including Larry Summers and several from 2000 to 2004, including lukewarm support from George Soros.

Tobin tax proposals and implementations around the world[link]

It was originally assumed that the Tobin tax would require multilateral implementation, since one country acting alone would find it very difficult to implement this tax. Many people have therefore argued that it would be best implemented by an international institution. It has been proposed that having the United Nations manage a Tobin tax would solve this problem and would give the UN a large source of funding independent from donations by participating states. However, there have also been initiatives of national dimension about the tax. (This is in addition to the many countries that have foreign exchange controls.)

Whilst finding some support in countries with strong left-wing political movements such as France and Latin America, the Tobin tax proposal came under much criticism from economists and governments, especially those with liberal markets and a large international banking sector, who said it would be impossible to implement and would destabilise foreign exchange markets.

Most of the actual implementation of Tobin taxes, whether in the form of a specific currency transaction tax, or a more general financial transaction tax, has occurred at a national level. In July, 2006, analyst Marion G. Wrobel examined the international experiences of various countries with financial transaction taxes.^[44]

Sweden's experience with financial transaction taxes[link]

Wrobel's paper highlighted the Swedish experience with financial transaction taxes.^[44] In January 1984, Sweden introduced a 0.5% tax on the purchase or sale of an equity security. Thus a round trip (purchase and sale) transaction resulted in a 1% tax. In July 1986 the rate was doubled. In January 1989, a considerably lower tax of 0.002% on fixed-income securities was introduced for a security with a maturity of 90 days or less. On a bond with a maturity of five years or more, the tax was 0.003%.

The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million.^[45] In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kronor by 1988.^[46]

On the day that the tax was announced, share prices fell by 2.2%. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement. When the tax was doubled, prices again fell by another 1%. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.

Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s.^{[citation needed]}

Tobin tax proponents reaction to the Swedish experience[link]

The Swedish experience of a transaction tax was with purchase or sale of equity securities, fixed income securities and derivatives. In global international currency trading, however, the situation could, some argue, look quite different. In 2000, Round argued as follows:

[The Tobin tax] could boost world trade by helping to stabilize exchange rates. Wildly fluctuating rates play havoc with businesses dependent on foreign exchange as prices and profits move up and down, depending on the relative value of the currencies being used. When importers and exporters can’t be certain from one day to the next what their money is worth, economic planning – including job creation – goes out the window. Reduced exchange-rate volatility means that businesses would need to spend less money ‘hedging’ (buying currencies in anticipation of future price changes), thus freeing up capital for investment in new production.^[36]

Wrobel's studies do not address the global economy as a whole, as James Tobin did when he spoke of "the nineties' crises in Mexico, South East Asia and Russia,"^[7][47] which included the 1994 economic crisis in Mexico, the 1997 Asian Financial Crisis, and the 1998 Russian financial crisis.

United Kingdom experience with stock transaction tax (Stamp Duty)[link]

An existing example of a Financial Transaction Tax (FTT) is Stamp Duty Reserve Tax (SDRT) and stamp duty.^[75] Stamp duty was introduced as an ad valorem tax on share purchases in 1808,^[76] preceding by over 150 years the Tobin tax on currency transactions. Changes were made in 1963.^[77] In 1963 the rate of the UK Stamp Duty was 2%, subsequently fluctuating between 1% and 2%, until a process of its gradual reduction started in 1984, when the rate was halved, first from 2% to 1%, and then once again in 1986 from 1% to the current level of 0.5%.^[77]

The changes in Stamp Duty rates in 1974, 1984, and 1986 provided researchers with "natural experiments", allowing them to measure the impact of transaction taxes on market volume, volatility, returns, and valuations of UK companies listed on the London Stock Exchange. Jackson and O'Donnel (1985), using UK quarterly data, found that the 1% cut in the Stamp Duty in April 1984 from 2% to 1% lead to a "dramatic 70% increase in equity turnover" .^[78] Analyzing all three Stamp Duty rate changes, Saporta and Kan (1997) found that the announcements of tax rate increases (decreases) were followed by negative (positive) returns, but even though these results were statistically significant, they were likely to be influenced by other factors, because the announcements were made on Budget Days.^[79] Bond et al. (2005) confirmed the findings of previous studies, noting also that the impact of the announced tax rate cuts was more beneficial (increasing market value more significantly) in case of larger firms, which had higher turnover, and were therefore more affected by the transaction tax than stocks of smaller companies, less frequently traded.^[80]

Because the UK tax code provides exemptions from the Stamp Duty Reserve Tax for all financial intermediaries, including market makers, investment banks and other members of the LSE,^[81] and due to the strong growth of the contracts for difference (CFD) industry, which provides UK investors with untaxed substitutes for LSE stocks, according to the Oxera (2007) report,^[77] more than 70% percent of the total UK stock market volume, including the entire institutional volume remained (in 2005) exempt from the Stamp Duty, in contrast to the common perception of this tax as a "tax on bank transactions" or a "tax on speculation". On the other hand, as much as 40% of the Stamp Duty revenues come from taxing foreign residents,^[82] because the tax is "chargeable whether the transaction takes place in the UK or overseas, and whether either party is resident in the UK or not."^[80]

Sterling Stamp Duty - a currency transactions tax proposed for pound sterling[link]

In 2005 the Tobin tax was developed into a modern proposal by the United Kingdom NGO Stamp Out Poverty. It simplified the two-tier tax in favour of a mechanism designed solely as a means for raising development revenue. The currency market by this time had grown to $2,000 billion a day. To investigate the feasibility of such a tax they hired the City of London firm Intelligence Capital, who found that a tax on Pound sterling wherever it was traded in the world, as opposed to a tax on all currencies traded in the UK, was indeed feasible and could be unilaterally implemented by the UK government.^[32]

The Sterling Stamp Duty, as it became known, was to be set at a rate 200 times lower than Tobin had envisaged in 2001, which “pro Tobin tax” supporters claim wouldn't have affected currency markets and could still raise large sums of money. The global currency market grew to $3,200 billion a day in 2007, or £400,000 billion per annum with the trade in sterling, the fourth most traded currency in the world, worth £34,000 billion a year.^[83] A sterling stamp duty set at 0.005% as some claim would have raised in the region of £2 billion a year in 2007.^[84] The All Party Parliamentary Group for Debt, Aid and Trade published a report in November 2007 into financing for development in which it recommended that the UK government undertake rigorous research into the implementation of a 0.005% stamp duty on all sterling foreign exchange transactions, to provide additional revenue to help bridge the funding gap required to pay for the Millennium Development Goals.^[85]

Multinational proposals[link]

In 1996 the United Nations Development Programme sponsored a comprehensive feasibility and cost-benefit study of the Tobin tax: Haq, Mahbub ul; Kaul, Inge; Grunberg, Isabelle (August 1996). The Tobin Tax: Coping with Financial Volatility. Oxford University Press. ISBN 978-0-19-511180-4.

European idea for a 'first Euro tax'[link]

In late 2001, a Tobin tax amendment was adopted by the French National Assembly. However, it was overturned by March 2002 by the French Senate.^[86][87][88]

On June 15, 2004, the Commission of Finance and Budget in the Belgian Federal Parliament approved a bill implementing a Spahn tax.^[89] According to the legislation, Belgium will introduce the Tobin tax once all countries of the eurozone introduce a similar law.^[90] In July 2005 former Austrian chancellor Wolfgang Schüssel called for a European Union Tobin tax to base the communities' financial structure on more stable and independent grounds. However, the proposal was rejected by the European Commission.

On November 23, 2009, the President of the European Council, Herman Van Rompuy, after attending a meeting of the Bilderberg Group argued for a European version of the Tobin tax.^[91][92] This tax would go beyond just financial transactions: "all shopping and petrol would be taxed.".^[91] Countering him was his sister, Christine Van Rompuy, who said, "any new taxes would directly affect the poor".^[93]

On June 29, 2011, the European Commission called for Tobin-style taxes on the EU's financial sector to generate direct revenue starting from 2014. At the same time it suggested to reduce existing levies coming from the 27 member states.^[94]

Support in some G20 nations[link]

The first nation in the G20 group to formally accept the Tobin tax was Canada.^[95] On March 23, 1999, the Canadian House of Commons passed a resolution directing the government to "enact a tax on financial transactions in concert with the international community."^[36] However, ten years later, in November 2009, at the G20 finance ministers summit in Scotland, the representatives of the minority government of Canada spoke publicly on the world stage in opposition to that Canadian House of Commons resolution.^[38]

In September 2009, French president Nicolas Sarkozy brought up the issue of a Tobin tax once again, suggesting it be adopted by the G20.^[96]

On November 7, 2009, prime minister Gordon Brown said that G-20 should consider a tax on speculation, although did not specify that it should be on currency trading alone. The BBC reported that there was a negative response to the plan among the G20.^[38]

By December 11, 2009, European Union leaders expressed broad support for a Tobin tax in a communiqué sent to the International Monetary Fund.^[12] On that day, the Financial Times reported the following:

Since the Nov 7 [2009] summit of the G20 Finance Ministers , the head of the International Monetary Fund, Mr Strauss-Kahn seems to have softened his doubts, telling the CBI employers' conference: "We have been asked by the G20 to look into financial sector taxes. ... This is an interesting issue. ... We will look at it from various angles and consider all proposals." ^[97]

For supporters of a Tobin tax, there is a wide range of opinion on who should administer a global Tobin tax and what the revenue should be used for. There are some who think that it should take the form of an insurance: In early November 2009, at the G20 finance ministers summit in Scotland, the British Prime Minister "Mr. Brown and Nicolas Sarkozy, France’s president, suggested that revenues from the Tobin tax could be devoted to the world’s fight against climate change, especially in developing countries. They suggested that funding could come from “a global financial transactions tax." However British officials later argued the main point of a financial transactions tax would be provide insurance for the global taxpayer against a future banking crisis."^[12][38]

The feasibility of gradual implementation of the FTT, beginning with a few EU nations[link]

John Dillon contends that it is not necessary to have unanimous agreement on the feasibility of an international FTT before moving forward. He proposes that it could be introduced gradually, beginning probably in Europe where support is strongest. The first stage might involve a levy on financial instruments within a few countries. Stephan Schulmeister of the Austrian Institute for Economic Re-search has suggested that initially Britain and Germany could implement a tax on a range of financial instruments since about 97% of all transactions on European Union exchanges occur in these two countries ^[42]

This scenario is possible, given the events in May and June, 2010:

• On June 27, 2010 at the 2010 G-20 Toronto summit, the G20 leaders declared that a "global tax" was no longer "on the table," but that individual countries will be able to decide whether to implement a levy against financial institutions to recoup billions of dollars in taxpayer-funded bailouts.^[98]

• Nevertheless Britain, France and Germany had already agreed before the summit to impose a "bank tax." ^[98] On May 20, 2010, German officials were understood to favour a financial transaction tax over a financial activities tax.^[99]

Two simultaneous taxes considered in the European Union[link]

On June 28, 2010, the European Union's executive said it will study whether the European Union should go alone in imposing a tax on financial transactions after G20 leaders failed to agree on the issue.

The financial transactions tax would be separate from a bank levy, or a resolution levy, which some governments are also proposing to impose on banks to insure them against the costs of any future bailouts. EU leaders instructed their finance ministers, in May, 2010, to work out by the end of October 2010, details for the banking levy, but any financial transaction tax remains much more controversial.^[100]

Latin America - Bank of the South[link]

In early November 2007, a regional Tobin tax was adopted by the Bank of the South, after an initiative of Presidents Hugo Chavez from Venezuela and Néstor Kirchner from Argentina.^[101]

UN Global Tax[link]

According to Stephen Spratt, "the revenues raised could be used for ... international development objectives ... such as meeting the Millennium Development Goals."(,^[32] p. 19) These are eight international development goals that 192 United Nations member states and at least 23 international organizations have agreed (in 2000) to achieve by the year 2015. They include reducing extreme poverty, reducing child mortality rates, fighting disease epidemics such as AIDS, and developing a global partnership for development.^[102]

In 2000, a representative of a “pro Tobin tax” NGO proposed the following:

In the face of increasing income disparity and social inequity, the Tobin Tax represents a rare opportunity to capture the enormous wealth of an untaxed sector and redirect it towards the public good. Conservative estimates show the tax could yield from $150-300 billion annually. The UN estimates that the cost of wiping out the worst forms of poverty and environmental destruction globally would be around $225 billion per year.^[36]

At the UN September 2001 World Conference against Racism, when the issue of compensation for colonialism and slavery arose in the agenda, Fidel Castro, the President of Cuba, advocated the Tobin Tax to address that issue. (According to Cliff Kincaid, Castro advocated it "specifically in order to generate U.S. financial reparations to the rest of the world," however a closer reading of Castro's speech shows that he never did mention "the rest of the world" as being recipients of revenue.) Castro cited Holocaust reparations as a previously established precedent for the concept of reparations.^[103][104]

Castro also suggested that the United Nations be the administrator of this tax, stating the following:

May the tax suggested by Nobel Prize Laureate James Tobin be imposed in a reasonable and effective way on the current speculative operations accounting for trillions of US dollars every 24 hours, then the United Nations, which cannot go on depending on meager, inadequate, and belated donations and charities, will have one trillion US dollars annually to save and develop the world. Given the seriousness and urgency of the existing problems, which have become a real hazard for the very survival of our species on the planet, that is what would actually be needed before it is too late.^[103]

On March 6, 2006, US Congressman Ron Paul stated the following:

The United Nations remains determined to rob from wealthy countries and, after taking a big cut for itself, send what’s left to the poor countries. Of course, most of this money will go to the very dictators whose reckless policies have impoverished their citizens. The UN global tax plan ... resurrects the long-held dream of the 'Tobin Tax'. A dangerous precedent would be set, however: the idea that the UN possesses legitimate taxing authority to fund its operations.^[105]

Support and opposition[link]

See also[link]

• Currency transaction tax
• Financial transaction tax
• Foreign exchange market
• Spahn tax
• Bank tax
• Robin Hood tax

References[link]

Further reading[link]

• Kaiser, Johannes; Chmura, Thorsten; Pitz, Thomas (July 2007). The Tobin Tax - A Game-Theoretical and an Experimental Approach. Social Science Electronic Publishing. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=936924. 

• Patomäki, Heikki (August 2001). Democratising Globalisation: The Leverage of the Tobin Tax. Zed Books. ISBN 978-1-85649-871-5. 

• Haq, Mahbub ul; Kaul, Inge; Grunberg, Isabelle (August 1996). The Tobin Tax: Coping with Financial Volatility. Oxford University Press. ISBN 978-0-19-511180-4. 

External links[link]

• Bank of Portugal report on the defense of the Portuguese Escudo in the European exchange rate mechanism
• BBC 7 November 2009 Lukewarm reaction to UK tax plan
• "Bibliography - Best Sources on Financing Alternatives, and Tobin Taxes" (includes economists on both sides of the issue of economic feasibility) from website of Tobin Tax Initiative
• Currency Transaction Taxes - Library of links to legislation, proposals, reports, articles and archives - from Global Policy Forum
• Debating the Tobin Tax, New Rules for Global Finance, 2003
• Disarming the markets, editorial by Ignacio Ramonet, Le Monde Diplomatique 1997
• English version of James Tobin interview on Der Spiegel on Jubilee 2000 web site
• Federal reserve bank of San Francisco article on the failed attack on the Hong Kong dollar
• IMF report (2004) on emerging market currency crises
• The Guardian editorializes against the Tobin tax

Robin Hood statue in Nottingham

Robin Hood was a heroic outlaw in English folklore. A highly skilled archer and swordsman, he is known for "robbing from the rich and giving to the poor",^[1] assisted by a group of fellow outlaws known as his "Merry Men".^[2] Traditionally, Robin Hood and his men are depicted wearing Lincoln green clothes.^[3] The origin of the legend is claimed by some to have stemmed from actual outlaws, or from ballads or tales of outlaws.^[4]

Robin Hood became a popular folk figure in the medieval period continuing through to modern literature, films and television. In the earliest sources, Robin Hood is a yeoman, but he was often later portrayed as an aristocrat wrongfully dispossessed of his lands and made into an outlaw by an unscrupulous sheriff.^[5]

History[link]

In popular culture, Robin Hood and his band of "merry men" are usually portrayed as living in Sherwood Forest, in Nottinghamshire, where much of the action in the early ballads takes place.^[6] So does the very first recorded Robin Hood rhyme, four lines from the early 15th century, beginning: "Robyn hode in scherewode stod."^[7] However, the overall picture from the surviving early ballads and other early references^[7] suggest that Robin Hood may have been based in the Barnsdale area of what is now South Yorkshire (which borders Nottinghamshire).

Other traditions point to a variety of locations as Robin's "true" home both inside Yorkshire and elsewhere, with the abundance of places named for Robin causing further confusion.^[8][9] A tradition dating back at least to the end of the 16th century gives his birthplace as Loxley, Sheffield in South Yorkshire, while the site of Robin Hood's Well in Skellow, South Yorkshire, has been associated with Robin Hood since at least 1422. Records show a man named Robin Hood lived in Wakefield, Yorkshire, in the 13th and 14th centuries.^[10] His grave has been claimed to be at Kirklees Priory near Mirfield in West Yorkshire, as implied by the 18th-century version of Robin Hood's Death, and there is a headstone there of dubious authenticity.^[11]

The first clear reference to "rhymes of Robin Hood" is from the late 14th-century poem Piers Plowman, but the earliest surviving copies of the narrative ballads that tell his story date to the 15th century, or the first decade of the 16th century. In these early accounts, Robin Hood's partisanship of the lower classes, his Marianism and associated special regard for women, his outstanding skill as an archer, his anti-clericalism, and his particular animosity towards the Sheriff of Nottingham are already clear.^[12] Little John, Much the Miller's Son and Will Scarlet (as Will "Scarlok" or "Scathelocke") all appear, although not yet Maid Marian or Friar Tuck. It is not certain what should be made of these latter two absences as it is known that Friar Tuck, for one, has been part of the legend since at least the later 15th century.^[13]

In popular culture, Robin Hood is typically seen as a contemporary and supporter of the late 12th-century king Richard the Lionheart, Robin being driven to outlawry during the misrule of Richard's brother John while Richard was away at the Third Crusade. This view first gained currency in the 16th century.^[14] It is not supported by the earliest ballads. The early compilation, A Gest of Robyn Hode, names the king as "Edward", and while it does show Robin Hood as accepting the King's pardon he later repudiates it and returns to the greenwood.

The oldest surviving ballad, Robin Hood and the Monk, gives even less support to the picture of Robin Hood as a partisan of the true king. The setting of the early ballads is usually attributed by scholars to either the 13th century or the 14th, although it is recognised they are not necessarily historically consistent.^[15]

The early ballads are also quite clear on Robin Hood's social status: he is a yeoman. While the precise meaning of this term changed over time, including free retainers of an aristocrat and small landholders, it always referred to commoners. The essence of it in the present context was "neither a knight nor a peasant or 'husbonde' but something in between".^[16] We know that artisans (such as millers) were among those regarded as "yeomen" in the 14th century.^[17] From the 16th century on, there were attempts to elevate Robin Hood to the nobility and in two extremely influential plays Anthony Munday presented him at the very end of the 16th century as the Earl of Huntingdon, as he is still commonly presented in modern times.^[18]

As well as ballads, the legend was also transmitted by "Robin Hood games" or plays that were an important part of the late medieval and early modern May Day festivities. The first record of a Robin Hood game was in 1426 in Exeter, but the reference does not indicate how old or widespread this custom was at the time. The Robin Hood games are known to have flourished in the later 15th and 16th centuries.^[19] It is commonly stated as fact that Maid Marian and a jolly friar (at least partly identifiable with Friar Tuck) entered the legend through the May Games.^[20]

The early ballads link Robin Hood to identifiable real places and many are convinced that he was a real person, more or less accurately portrayed. A number of theories as to the identity of "the real Robin Hood" have their supporters. Some of these theories posit that "Robin Hood" or "Robert Hood" or the like was his actual name; others suggest that this may have been merely a nickname disguising a medieval bandit perhaps known to history under another name.^[21] One historian claims Robin Hood was a pseudonym by which the ancient Lords of Wellow, Nottinghamshire, were once known.^[22] It is interesting that the village has such a strong connection with maypole celebrations, considering Robin Hood's links with the same thing.

At the same time it is possible that Robin Hood has always been a fictional character; the folklorist Francis James Child declared "Robin Hood is absolutely a creation of the ballad-muse" and this view has been neither proven or disproven.^[23] Another view is that Robin Hood's origins must be sought in folklore or mythology;^[24] Despite the frequent Christian references in the early ballads, Robin Hood has been claimed for the pagan witch-cult supposed by Margaret Murray to have existed in medieval Europe.^[25]

Early references[link]

The oldest references to Robin Hood are not historical records, or even ballads recounting his exploits, but hints and allusions found in various works. From 1228 onwards, the names 'Robinhood', 'Robehod' or 'Robbehod' occur in the rolls of several English Justices. The majority of these references date from the late 13th century. Between 1261 and 1300, there are at least eight references to 'Rabunhod' in various regions across England, from Berkshire in the south to York in the north.^[26]

In a petition presented to Parliament in 1439, the name is used to describe an itinerant felon. The petition cites one Piers Venables of Aston, Derbyshire, "who having no liflode, ne sufficeante of goodes, gadered and assembled unto him many misdoers, beynge of his clothynge, and, in manere of insurrection, wente into the wodes in that countrie, like as it hadde be Robyn Hude and his meyne."^[27] The name was still used to describe sedition and treachery in 1605, when Guy Fawkes and his associates were branded "Robin Hoods" by Robert Cecil.

The first allusion to a literary tradition of Robin Hood tales occurs in William Langland's Piers Plowman (c. 1362–c. 1386) in which Sloth, the lazy priest, confesses: "I kan [know] not parfitly [perfectly] my Paternoster as the preest it singeth,/ But I kan rymes of Robyn Hood and Randolf Erl of Chestre."^[28]

The first mention of a quasi-historical Robin Hood is given in Andrew of Wyntoun's Orygynale Chronicle, written in about 1420. The following lines occur with little contextualisation under the year 1283:

Lytil Jhon and Robyne Hude

Wayth-men ware commendyd gude

In Yngil-wode and Barnysdale

Thai oysyd all this tyme thare trawale.

The next notice is a statement in the Scotichronicon, composed by John of Fordun between 1377 and 1384, and revised by Walter Bower in about 1440. Among Bower's many interpolations is a passage that directly refers to Robin. It is inserted after Fordun's account of the defeat of Simon de Montfort and the punishment of his adherents. Robin is represented as a fighter for de Montfort's cause.^[29] This was in fact true of the historical outlaw of Sherwood Forest Roger Godberd, whose points of similarity to the Robin Hood of the ballads have often been noted.^[30][31]

Bower writes:

Then [c. 1266] arose the famous murderer, Robert Hood, as well as Little John, together with their accomplices from among the disinherited, whom the foolish populace are so inordinately fond of celebrating both in tragedies and comedies, and about whom they are delighted to hear the jesters and minstrels sing above all other ballads.

The word translated here as "murderer" is the Latin siccarius, from the Latin for "knife". Bower goes on to tell a story about Robin Hood in which he refuses to flee from his enemies while hearing Mass in the greenwood, and then gains a surprise victory over them, apparently as a reward for his piety.^[32]

Another reference, discovered by Julian Luxford in 2009, appears in the margin of the "Polychronicon" in the Eton College library. Written around the year 1460 by a monk in Latin, it says:

Around this time, according to popular opinion, a certain outlaw named Robin Hood, with his accomplices, infested Sherwood and other law-abiding areas of England with continuous robberies.^[33]

William Shakespeare makes reference to Robin Hood in his late 16th-century play The Two Gentlemen of Verona, one of his earliest. In it, the character Valentine is banished from Milan and driven out through the forest where he is approached by outlaws who, upon meeting him, desire him as their leader. They comment, "By the bare scalp of Robin Hood's fat friar, This fellow were a king for our wild faction!"^[34] Robin Hood is also mentioned in As You Like It. When asked about the exiled Duke Senior, the character of Charles says that he is "already in the forest of Arden, and a many merry men with him; and there they live like the old Robin Hood of England."

References to Robin as Earl of Huntington[link]

Another reference is provided by Thomas Gale, Dean of York (c. 1635–1702),^[35] but this comes nearly four hundred years after the events it describes:

[Robin Hood's] death is stated by Ritson to have taken place on the 18th of November, 1247, about the 87th year of his age; but according to the following inscription found among the papers of the Dean of York...the death occurred a month later. In this inscription, which bears evidence of high antiquity, Robin Hood is described as Earl of Huntington - his claim to which title has been as hotly contested as any disputed peerage upon record.

Hear undernead dis laitl stean

Lais Robert Earl of Huntingun

Near arcir der as hie sa geud

An pipl kauld im Robin Heud

Sic utlaws as hi an is men

Vil England nivr si agen.

Obiit 24 Kal Dekembris 1247

This inscription also appears on a grave in the grounds of Kirklees Priory near Kirklees Hall (see below).

Robert is largely fictional by this time. The Gale note is inaccurate. The medieval texts do not refer to him directly, but mediate their allusions through a body of accounts and reports: for Langland, Robin exists principally in "rimes", for Bower, "comedies and tragedies", while for Wyntoun he is "commendyd gude". Even in a legal context, where one would expect to find verifiable references to Robert, he is primarily a symbol, a generalised outlaw-figure rather than an individual. Consequently, in the medieval period itself, Robin Hood already belongs more to literature than to history. In fact, in an anonymous song called Woman of c. 1412, he is treated in precisely this manner - as a joke, a figure that the audience will instantly recognise as imaginary:

He that made this songe full good,

Came of the northe and the sothern blode,

And somewhat kyne to Robert Hoad.^[36][37]

Sources[link]

"Robin shoots with Sir Guy" by Louis Rhead

There is at present little scholarly support for the view that tales of Robin Hood have stemmed from mythology or folklore, from fairies or other mythological origins, any such associations being regarded as later development.^[38] The mythological theory does go back to at least to 1584, when Reginald Scot identified Robin Hood with the Germanic goblin "Hudgin" or Hodekin and associated him with Robin Goodfellow.^[39] Maurice Keen^[40] provides a brief summary and useful critique of the once-popular view that Robin Hood had mythological origins, while (unlike some)^[41] refraining from utterly and finally dismissing it.^[42] While Robin Hood and his men often show great skill in archery, swordplay and disguise, they are no more exaggerated than those characters in other ballads, such as Kinmont Willie, which were based on historical events.^[43]

Robin Hood's role in the traditional May Day games could suggest pagan connections, but that role has not been traced earlier than the early 15th century. However, it is uncontroversial that a Robin and Marion figured in 13th-century French "pastourelles" (of which Jeu de Robin et Marion c. 1280 is a literary version) and presided over the French May festivities, "this Robin and Marion tended to preside, in the intervals of the attempted seduction of the latter by a series of knights, over a variety of rustic pastimes."^[44]

In the Jeu de Robin and Marion, Robin and his companions have to rescue Marion from the clutches of a "lustful knight".^[45] Dobson and Taylor in their survey of the legend, in which they reject the mythological theory, nevertheless regard it as "highly probable" that this French Robin's name and functions travelled to the English May Games where they fused with the Robin Hood legend.^[44]

The origin of the legend is claimed by some to have stemmed from actual outlaws, or from tales of outlaws, such as Hereward the Wake, Eustace the Monk, Fulk FitzWarin^[4] and William Wallace.^[46] Hereward appears in a ballad much like Robin Hood and the Potter, and as the Hereward ballad is older, it appears to be the source. The ballad Adam Bell, Clym of the Cloughe and Wyllyam of Cloudeslee runs parallel to Robin Hood and the Monk, but it is not clear whether either one is the source for the other, or whether they merely show that such tales were told of outlaws.^[47]

Some early Robin Hood stories appear to be unique, such as the story wherein Robin gives a knight, generally called Richard at the Lee, money to pay off his mortgage to an abbot, but this may merely indicate that no parallels have survived.^[48]

There are a number of theories that attempt to identify a historical Robin Hood. A difficulty with any such historical search is that "Robert" was in medieval England a very common given name, and "Robin" (or Robyn), especially in the 13th century, was its very common diminutive.^[49] The surname "Hood" (or Hude or Hode etc.), referring ultimately to the head-covering, was also fairly common. Unsurprisingly, therefore, there are a number of people called "Robert Hood" or "Robin Hood" to be found in medieval records. Some of them are on record for having fallen afoul of the law, but this is not necessarily significant to the legend.^[50]

The early ballads give a number of possible historical clues: notably, the Gest names the reigning king as "Edward", but the ballads cannot be assumed to be reliable in such details.^[51] For whatever it may be worth, however, King Edward I took the throne in 1272, and an Edward remained on the throne until the death of Edward III in 1377.

On the other hand, what appears to be the first known example of "Robin Hood" as stock name for an outlaw dates to 1262 in Berkshire, where the surname "Robehod" was applied to a man apparently because he had been outlawed.^[52] This could suggest two main possibilities: either that an early form of the Robin Hood legend was already well established in the mid 13th century; or alternatively that the name "Robin Hood" preceded the outlaw hero that we know; so that the "Robin Hood" of legend was so called because that was seen as an appropriate name for an outlaw.

It has long been suggested, notably by John Maddicott, that "Robin Hood" was a stock alias used by thieves.^[53] The 1911 Encyclopædia Britannica remarks that 'hood' was a common dialectical form of 'wood'; and that the outlaw's name has been given as "Robin Wood".^[24] There are indeed a number of references to Robin Hood as Robin Wood, or Whood, or Whod, from the 16th and 17th centuries. The earliest recorded example, in connection with May games in Somerset, dates from 1518.^[54]

One well-known theory of origin was proposed by Joseph Hunter in 1852. Hunter identified the outlaw with a "Robyn Hode" recorded as employed by Edward II in 1323 during the king's progress through Lancashire. This Robyn Hode was identified with (one or more people called) Robert Hood living in Wakefield before and after that time. Comparing the available records with especially the Gest and also other ballads, Hunter developed a fairly detailed theory according to which Robin Hood was an adherent of the rebel Earl of Lancaster, defeated at the Battle of Boroughbridge in 1322.

According to this theory, Robin Hood was pardoned and employed by the king in 1323. (The Gest does relate that Robin Hood was pardoned by "King Edward" and taken into his service.) The theory supplies Robin Hood with a wife, Matilda, thought to be the origin of Maid Marian, and Hunter also conjectured that the author of the Gest may have been the religious poet Richard Rolle (1290–1349), who lived in the village of Hampole in Barnsdale.^[55]

This theory has long been recognised to have serious problems, one of the most serious being that "Robin Hood" and similar names were already used as nicknames for outlaws in the 13th century. Another is that there is no direct evidence that Hunter's Hood had ever been an outlaw or any kind of criminal or rebel at all; the theory is built on conjecture and coincidence of detail.^[56] Finally, recent research has shown that Hunter's Robyn Hood had been employed by the king at an earlier stage, thus casting doubt on this Robyn Hood's supposed earlier career as outlaw and rebel.^[57]

Another theory identifies him with the historical outlaw Roger Godberd, who was a die-hard supporter of Simon de Montfort, which would place Robin Hood around the 1260s.^[21] There are certainly parallels between Godberd's career and that of Robin Hood as he appears in the Gest. John Maddicott has called Godberd "that prototype Robin Hood".^[58] Some problems with this theory are that there is no evidence that Godberd was ever known as Robin Hood and no sign in the early Robin Hood ballads of the specific concerns of de Montfort's revolt.^[56]

Another well-known theory, first proposed by the historian L. V. D. Owen in 1936 and more recently floated by J.C. Holt and others, is that the original Robin Hood might be identified with an outlawed Robert Hood, or Hod, or Hobbehod, all apparently the same man, referred to in nine successive Yorkshire Pipe Rolls between 1226 and 1234.^[59][60] There is no evidence however that this Robert Hood, although an outlaw, was also a bandit.^[61]

Ballads and tales[link]

The earliest surviving text of a Robin Hood ballad is "Robin Hood and the Monk".^[62] This is preserved in Cambridge University manuscript Ff.5.48. It was written shortly after 1450.^[63] It contains many of the elements still associated with the legend, from the Nottingham setting to the bitter enmity between Robin and the local sheriff.

Douglas Fairbanks as Robin Hood; the sword he is depicted with was common in the oldest ballads

The first printed version is A Gest of Robyn Hode (c. 1475), a collection of separate stories which attempts to unite the episodes into a single continuous narrative.^[64] After this comes "Robin Hood and the Potter",^[65] contained in a manuscript of c. 1503. "The Potter" is markedly different in tone from "The Monk": whereas the earlier tale is "a thriller"^[26] the latter is more comic, its plot involving trickery and cunning rather than straightforward force. The difference between the two texts recalls Bower's claim that Robin-tales may be both 'comedies and tragedies'.

Other early texts are dramatic pieces such as the fragmentary Robyn Hod and the Shryff off Notyngham^[66] (c. 1472). These are particularly noteworthy as they show Robin's integration into May Day rituals towards the end of the Middle Ages; Robyn Hod and the Shryff off Notyngham, among other points of interest, contains the earliest reference to Friar Tuck.

The plots of neither "the Monk" nor "the Potter" are included in the Gest; and neither is the plot of "Robin Hood and Guy of Gisborne" which is probably at least as old as those two ballads although preserved in a more recent copy. Each of these three ballads survived in a single copy, so it is unclear how much of the medieval legend has survived, and what has survived may not be typical of the medieval legend. It has been argued that the fact that the surviving ballads were preserved in written form in itself makes it unlikely they were typical; in particular stories with an interest for the gentry were by this view more likely to be preserved.^[67] The story of Robin's aid to the "poor knight" that takes up much of the Gest may be an example.

The character of Robin in these first texts is rougher edged than in his later incarnations. In "Robin Hood and the Monk", for example, he is shown as quick tempered and violent, assaulting Little John for defeating him in an archery contest; in the same ballad Much the Miller's Son casually kills a "little page" in the course of rescuing Robin Hood from prison.^[6] No extant ballad actually shows Robin Hood "giving to the poor", although in a "A Gest of Robyn Hode" Robin does make a large loan to an unfortunate knight which he does not in the end require to be repaid;^[68] and later in the same ballad Robin Hood states his intention of giving money to the next traveller to come down the road if he happens to be poor.