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Implementation of a General Financial Transactions Tax


  • Stephan Schulmeister


The study summarises the most significant observations about trading behaviour and price dynamics in financial markets. Against this background, the main objections to a general financial transactions tax (FTT) as put forward by the International Monetary Fund and the European Commission are evaluated. The main part of the study deals with the two different ways of how an FTT could be implemented. With the centralised approach, the tax is collected at point of settlement, either from the electronic settlement systems at exchanges, or from Central Counterparty Platforms (CCPs) in the case of over-the-counter (OTC) transactions, respectively. With the decentralised approach, the tax is deducted by the banks which transmit an order to an exchange or which carry out an OTC transaction. The centralised tax deduction would be optimal but requires a broad consensus among countries within the same trading time zone. By contrast, the decentralised approach could be implemented by a group of (EU or euro) countries without doing much harm to their own markets.

Suggested Citation

  • Stephan Schulmeister, 2011. "Implementation of a General Financial Transactions Tax," WIFO Studies, WIFO, number 41992, 12-2020.
  • Handle: RePEc:wfo:wstudy:41992

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    References listed on IDEAS

    1. European Commission, 2010. "Financial Sector Taxation," Taxation Papers 25, Directorate General Taxation and Customs Union, European Commission.
    2. Helene Schuberth & Stephan Schulmeister, 2011. "Settlement Systems and Financial Transactions Taxes," WIFO Studies, WIFO, number 42610.
    3. Menkhoff, Lukas, 2010. "The use of technical analysis by fund managers: International evidence," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2573-2586, November.
    4. Zsolt Darvas & Jakob Weizsäcker, 2011. "Financial transaction tax: Small is beautiful," Society and Economy, Akadémiai Kiadó, Hungary, vol. 33(3), pages 449-473, December.
    5. Dean Baker & Robert Pollin & Travis McArthur & Matt Sherman, 2009. "The Potential Revenue from Financial Transactions Taxes," CEPR Reports and Issue Briefs 2009-50, Center for Economic and Policy Research (CEPR).
    6. Lukas Menkhoff & Mark P. Taylor, 2007. "The Obstinate Passion of Foreign Exchange Professionals: Technical Analysis," Journal of Economic Literature, American Economic Association, vol. 45(4), pages 936-972, December.
    7. Stephan Schulmeister & Margit Schratzenstaller & Oliver Picek, 2008. "A General Financial Transaction Tax. Motives, Revenues, Feasibility and Effects," WIFO Studies, WIFO, number 31819, 12-2020.
    8. European Commission, 2010. "Innovative Financing at a Global Level," Taxation Papers 23, Directorate General Taxation and Customs Union, European Commission.
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    Cited by:

    1. Atanas Pekanov & Margit Schratzenstaller, 2018. "Evaluating the Revenues from a Financial Transaction Tax in 10 EU Member States through Enhanced Cooperation," WIFO Studies, WIFO, number 62043.
    2. Karl Aiginger, 2012. "85 Jahre WIFO: Gedanken zu Geschichte und Zukunft des Institutes," WIFO Monatsberichte (monthly reports), WIFO, vol. 85(6), pages 497-510, June.
    3. Stephan Schulmeister & Eva Sokoll, 2013. "Implementation of a Financial Transaction Tax by a Group of EU Member States. Estimation of Relocation Effects, of the Size and Distribution of Revenues and of the First-mover Advantage of the Partici," WIFO Studies, WIFO, number 46864.
    4. Atanas Pekanov & Margit Schratzenstaller, 2019. "A Global Financial Transaction Tax. Theory, Practice and Potential Revenues," WIFO Working Papers 582, WIFO.

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