A General Financial Transaction Tax: The Concept, its Justification and Effects
AbstractInitially this paper outlines the concept of a tax on all transactions to do with financial assets. It summarises the main arguments for and against such a tax. The next part documents the relevant empirical evidence necessary to be able to evaluate the arguments. In particular the development of financial transactions is documented, as well as the dynamic of exchange rates, raw material prices and share prices. The data would suggest that the introduction of a financial transaction tax would reduce the instability of such prices. Indeed it would reduce not only its short term volatility but also the longer term upwards and downwards trends ("bull markets" and "bear markets"). Finally the potential revenue of a transaction tax is estimated for three different rates of tax (0,1 percent, 0,05 percent and 0,01 percent). Due to the high trading volumes on the financial markets the revenue from such a tax would be considerable: with a tax rate of 0.05 percent the revenues in Germany were between 0.7 percent and 1.5 percent of GDP and in Europe between 0.9 percent and 2.1 percent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by WIFO in its series WIFO Working Papers with number 352.
Length: 21 pages
Date of creation: 10 Dec 2009
Date of revision:
Finanztransaktionen; Spekulationstechniken; Dynamik von Vermögenspreisen; Transaktionssteuern;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephan Schulmeister, 2010.
"Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax,"
Chapters in SUERF Studies,
SUERF - The European Money and Finance Forum.
- Stephan Schulmeister, 2009. "Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax," WIFO Working Papers 340, WIFO.
- Stephan Schulmeister, 2008.
"Profitability of Technical Stock Trading: Has it Moved from Daily to Intraday Data?,"
WIFO Working Papers
- Schulmeister, Stephan, 2009. "Profitability of technical stock trading: Has it moved from daily to intraday data?," Review of Financial Economics, Elsevier, vol. 18(4), pages 190-201, October.
- Marc Schaberg & Dean Baker & Robert Pollin, 2002.
"Securities Transaction Taxes for U.S. Financial Markets,"
wp20, Political Economy Research Institute, University of Massachusetts at Amherst.
- Robert Pollin & Dean Baker & Marc Schaberg, 2003. "Securities Transaction Taxes for U.S. Financial Markets," Eastern Economic Journal, Eastern Economic Association, vol. 29(4), pages 527-558, Fall.
- Barry Eichengreen, James Tobin, and Charles Wyplosz., 1994.
"Two Cases for Sand in the Wheels of International Finance,"
Center for International and Development Economics Research (CIDER) Working Papers
C94-045, University of California at Berkeley.
- Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-72, January.
- Harry Huizinga, 2002. "A European VAT on financial services?," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 497-534, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz).
If references are entirely missing, you can add them using this form.