IN 1816 the British parliament repealed the temporary income tax that William Pitt the Younger had introduced in 1789 to finance the Napoleonic war. The MPs hated the tax so much that they even agreed all documents connected with it should be collected, cut into pieces and pulped.

When income tax was reintroduced in Britain in 1842 by Robert Peel, everyone considered it a temporary measure to replenish the depleted exchequer. But despite generations of politicians after Peel promising to abolish it, the tax never went away. It proved impossible to abandon a tax whose time had come.

By the time Benjamin Disraeli and William Gladstone kept breaking their promises to abolish income tax — one of the few things they agreed on — the homespun capitalism of the 18th century had already given way to a more organised capitalist system.

With economic development the social division of labour was becoming more and more sophisticated, increasing the importance of collective inputs such as infrastructure and education. A more effective provision of collective goods required a well-financed state, for which an income tax was seen as a new and vital ingredient. As they too developed, countries such as the United States and Sweden followed suit. Today income tax is the biggest source of government revenue in most rich countries.

The same destiny may await the financial transactions tax (FTT) — or Robin Hood tax, as it is widely known. Although the French government, which chaired meetings of the G20 finance ministers and the IMF and World Bank member states last weekend, supports a global Robin Hood tax, American opposition means that initial progress is more likely within a smaller ‘coalition of the willing’, including France, Germany, and South Africa. French and German support may ensure that the eurozone is the first international forum that agrees to a transactions tax.

Even a decade ago, when it was doing the rounds under the alias of ‘Tobin tax’ (named after James Tobin, the Nobel laureate economist who first raised the idea), the levy was an absolute taboo in polite society. But after the great financial crash of 2008, the case for the tax is looking ‘obvious’ to many, as indeed the income tax did in the late 19th century. Its time, too, has come.

This levy on financial transactions, even at the very low level that is currently proposed (0.05 per cent), is expected to slow down the most speculative elements of international capital flows and raise the significant sums needed to provide the newly required global collective goods — especially green technologies and development aid. — The Guardian, London

Ha-Joon Chang teaches economics at Cambridge university; Duncan Green is the head of research at Oxfam GB.