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Rethinking the Taxation of the Financial Sector


  • Michael Keen


The economic crisis that erupted in 2008 has prompted many countries to rethink, and several already to reform, the taxation of financial institutions. The underlying analytical issues, however, have received almost no attention in the public finance literature. This article explores the possible purposes and broad design of distinctive tax measures for financial institutions, focusing especially on the potential role of corrective taxation, and its merits relative to traditional forms of regulation, in addressing the challenges posed by the potential failure of systemically important institutions. (JEL codes: G38, H21 and H23) Copyright The Author 2011. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email:, Oxford University Press.

Suggested Citation

  • Michael Keen, 2011. "Rethinking the Taxation of the Financial Sector ," CESifo Economic Studies, CESifo, vol. 57(1), pages 1-24, March.
  • Handle: RePEc:oup:cesifo:v:57:y:2011:i:1:p:1-24

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    References listed on IDEAS

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    Cited by:

    1. Hilmer, Michael, 2014. "Too many to fail - How bonus taxation prevents gambling for bailouts," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100552, Verein für Socialpolitik / German Economic Association.
    2. repec:eee:finsta:v:31:y:2017:i:c:p:81-92 is not listed on IDEAS
    3. Michael Hilmer, 2014. "Bailouts, Bonuses and Bankers' Short-Termism," Working Papers tax-mpg-rps-2014-17, Max Planck Institute for Tax Law and Public Finance.
    4. Matthias Lengnick & Hans-Werner Wohltmann, 2013. "Agent-based financial markets and New Keynesian macroeconomics: a synthesis," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 1-32, April.
    5. Jürgen Antony & Michiel Bijlsma & Adam Elbourne & Marcel Lever & Gijsbert Zwart, 2012. "Financial transaction tax: review and assessment," CPB Discussion Paper 202, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Chaudhry, Sajid Mukhtar & Mullineux, Andrew & Agarwal, Natasha, 2015. "Balancing the regulation and taxation of banking," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 38-52.
    7. Michael Hilmer, 2014. "Too Many to Fail - How Bonus Taxation Prevents Gambling for Bailouts," Working Papers tax-mpg-rps-2014-18, Max Planck Institute for Tax Law and Public Finance.
    8. Vidar Christiansen, 2017. "Indirect Taxation of Financial Services," CESifo Working Paper Series 6675, CESifo Group Munich.
    9. Ruud A. de Mooij & Michael Keen & Masanori Orihara, 2013. "Taxation, Bank Leverage, and Financial Crises," IMF Working Papers 13/48, International Monetary Fund.
    10. Hilmer, Michael, 2013. "Fiscal treatment of managerial compensation - a welfare analysis," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79703, Verein für Socialpolitik / German Economic Association.
    11. Michael Keen, 2011. "The Taxation and Regulation of Banks," IMF Working Papers 11/206, International Monetary Fund.
    12. Cappelletti, Giuseppe & Guazzarotti, Giovanni & Tommasino, Pietro, 2017. "The stock market effects of a securities transaction tax: Quasi-experimental evidence from Italy," Journal of Financial Stability, Elsevier, vol. 31(C), pages 81-92.
    13. Di Gong & Shiwei Hu & Jenny Ligthart, 2015. "Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 48(3), pages 193-213, December.
    14. Lendvai, Julia & Raciborski, Rafal & Vogel, Lukas, 2013. "Macroeconomic effects of an equity transaction tax in a general-equilibrium model," Journal of Economic Dynamics and Control, Elsevier, vol. 37(2), pages 466-482.
    15. Vidar Christiansen, 2017. "Taxation of Insurance," CESifo Working Paper Series 6830, CESifo Group Munich.
    16. Erbe, Katharina & Büttner, Thiess, 2013. "FAT or VAT? The Financial Activities Tax as a Substitute to Imposing Value Added Tax on Financial Services," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79959, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies


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