An international financial transaction tax is levied on transactions involving particular assets, for example, stocks, bonds, currencies or derivatives; the proposed tax rate is usually low: depending on the type of asset, somewhere between 0.01 per cent and 1 per cent of the value of the transaction. Should the European Union introduce such a tax? There are five reasons why it should:
· Public Goods Provision: Through paying a tax, those who benefit from the availability of a stable financial system would contribute to the costs of maintaining it.
· Externalities and compensation: Tax revenues can be used to compensate those who are adversely affected by financial instability and crisis.
· Social Justice: By effectively reducing capital mobility, a financial transaction tax will make it easier for states to ensure social justice.
· Global Justice: Tax revenues can be used to reduce global poverty and narrow the gap between rich and poor.
· Economic stability: An international financial transaction tax will make international finance less volatile and ensure that assets are put to long-term productive use.
Under the proposed law:
- Stocks and bonds sales will be taxed by 0.1%
- Derivative contracts will be taxed at 0.01%
- The estimated revenue from the tax will be 57 billion euro per year
- The main rationale behind this is so that financial institutions contribute to the recovery.
- Citizens and businesses will not be taxed.
- Housing loans, bank loans, insurance contracts etc will be exempted.
Still not sure why derivatives are taxed lower than stocks and bonds, I thought those caused the bigger part of the collapse.
Is this what Occupy Wall Street is asking from the US government?
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1085&format=HTML&aged=0&language=en&guiLanguage=en
http://ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/
Hi
As stated in the title, I am wondering about the FTT, (here is a Wikipage for those who haven't heard of it) and what consequences you think it will have.
Do you think it will bring in more money to the countries in question and curb high volatile trading? Or, will the trading move elsewhere and the countries will be worse of than before?
I am Swedish and we have tried (and failed) with a variety of this tax. Although I understand that this FTT is different, I am doubtful that it will work. It also seems to me like the countries that are trying to implement it are trying to raise money since they are having other economical problems (the Eurozone and at it's woes) rather than having more problem than anyone else with volatile trading. Am I right or wrong about this?
Also, if you have any scientific articles, studies etc that investigates the pros and cons of the FTT I'd be very happy.
Thank you.
