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Settlement Systems and Financial Transactions Taxes

Author

Listed:
  • Helene Schuberth

    (Oesterreichische Nationalbank)

  • Stephan Schulmeister

Abstract

Recent technological advances in payment and settlement systems as well as initiatives taken in the wake of the financial crisis to regulate derivatives markets facilitate the implementation of financial transactions taxes (FTTs). Institutions operating settlement and payment systems as well as exchanges could be required to collect and remit the respective revenues to fiscal authorities. This approach involves much lower costs compared to the administrative burden associated with collecting the tax from market participants. It further reduces opportunities for tax avoidance and evasion. The study assesses the technical feasibility of such a central approach of FTT administration. The analysis is conducted for transactions on organised exchanges and over-the-counter transactions. Regarding the latter, special attention is devoted to foreign exchange transactions that are mostly traded over the counter. Implementing an FTT on exchange-traded instruments seems to be straightforward and is now common practice in some EU countries. The Continuous Linked Settlement Bank and the establishment of Central Counterparty Platforms for derivatives traded over the counter facilitate a centralised collection of taxes also on transactions outside organised exchanges.

Suggested Citation

  • Helene Schuberth & Stephan Schulmeister, 2011. "Settlement Systems and Financial Transactions Taxes," WIFO Studies, WIFO, number 42610, April.
    • Handle: RePEc:wfo:wstudy:42610
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    File URL: https://www.wifo.ac.at/wwa/pubid/42610
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    References listed on IDEAS

    as
    1. Stephan Schulmeister, 2011. "Implementation of a General Financial Transactions Tax," WIFO Studies, WIFO, number 41992, April.
    2. Kapoor, Sony & Hillman, David & Spratt, Stephen, 2007. "Taking the Next Step - Implementing a Currency Transaction Development Levy," MPRA Paper 4054, University Library of Munich, Germany.
    3. Steve Bond & Mike Hawkins & Alexander Klemm, 2005. "Stamp Duty on Shares and Its Effect on Share Prices," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(3), pages 275-297, November.
    4. European Commission, 2010. "Financial Sector Taxation," Taxation Papers 25, Directorate General Taxation and Customs Union, European Commission.
    5. John Y. Campbell & Kenneth A. Froot, 1994. "International Experiences with Securities Transaction Taxes," NBER Chapters, in: The Internationalization of Equity Markets, pages 277-308, National Bureau of Economic Research, Inc.
    6. Mr. John Kiff & Ms. Jennifer A. Elliott & Mr. Elias G. Kazarian & Ms. Jodi G Scarlata & Carolyne Spackman, 2009. "Credit Derivatives: Systemic Risks and Policy Options?," IMF Working Papers 2009/254, International Monetary Fund.
    7. Rodney Schmidt, 2001. "Efficient capital controls," Journal of Economic Studies, Emerald Group Publishing, vol. 28(3), pages 199-212, September.
    8. Stephan Schulmeister, 2010. "Boom-Bust Cycles and Trading Practices in Asset Markets, the Real Economy and the Effects of a Financial Transactions Tax," WIFO Working Papers 364, WIFO.
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    1. Stephan Schulmeister, 2011. "Implementation of a General Financial Transactions Tax," WIFO Studies, WIFO, number 41992, April.

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