International Experiences with Securities Transaction Taxes
In: The Internationalization of Equity Markets
This paper studies the international experience with securities transaction taxes (STTs), using the Swedish and British systems as case studies. We argue that STTs are best thought of as taxes on different resources used in transactions: domestic brokerage services in the case of Sweden, and registration services in the British case. STTs give investors incentives to economize on the taxed resources by shifting trading to foreign markets or untaxed assets, or by reducing the volume of trade. We show that these effects can be important. Estimated revenues from an STT will be correspondingly overstated if they ignore such behavioral effects.
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- Kenneth A. Froot & Andre F. Perold & Jeremy C. Stein, 1991.
"Shareholder Trading Practices and Corporate Investment Horizons,"
NBER Working Papers
3638, National Bureau of Economic Research, Inc.
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" Herd on the Street: Informational Inefficiencies in a Market with Short-Term Speculation,"
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- Summers, L.H. & Summers, V.P., 1989. "When Financial Markets Work Too Well : A Cautious Case For A Securities Transactions Tax," Papers t12, Columbia - Center for Futures Markets.
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