CMV: The European Union should introduce a comprehensive financial transaction tax
Fri Jun 08 2018 15:00:00 GMT+0000 (Coordinated Universal Time)
Humboldt University Berlin
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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.
Ideas to introduce a financial transaction tax or a tax in the style of a “Tobin tax” within the European Union have been circulating since the wake of the financial crisis
There has been a concrete proposal for a EU-wide financial transaction tax called EU FTT by the European Commission since 2011
Public support for a financial transaction tax has been high within the EU according to polls and studies over the past decade
A number of polls found that between 61 and 63 percent of interviewed EU citizens (or G20-citizens) were “strongly in favor” of a transaction tax
However, progress on the implementation of a financial transaction tax has been rather slow over the past years, allegedly in part because of financial sector lobbying and lacking party support within some EU member states
LEGISLATIVE TRAIN SCHEDULE FINANCIAL TRANSACTION TAX