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Levies on Equity Transactions to Finance Climate Action

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Abstract

Mobilising substantial new resources is essential to address the climate crisis, particularly for low-income developing countries disproportionately affected by its impacts. Financial Transactions Taxes (FTTs) on equity trading, already implemented in several countries and generating around $17 billion annually, represent an underutilised but promising revenue stream. Drawing on existing implementations, particularly in France and the UK, the paper evaluates legal feasibility and revenue potential. We argue that expanding and harmonising such levies — designed with simplicity, enforceability, and fairness in mind —could raise an additional $87 billion per year, significantly contributing to climate action, especially related loss and damage needs. In the context of the Global Solidarity Levies Task Force (GSLTF) initiated at COP28, the study highlights the FTT as a technically feasible, low-cost, and non-distortive mechanism to raise climate finance quickly and effectively, fulfilling the criteria sought by GSLTF and offering a practical path forward in the broader effort to scale up international development and climate funding

Suggested Citation

  • Gunther Capelle-Blancard & Avinash Persaud, 2025. "Levies on Equity Transactions to Finance Climate Action," Documents de travail du Centre d'Economie de la Sorbonne 25011, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:25011
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    1. Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-1438, April.
    2. Becchetti, L. & Ferrari, M. & Trenta, U., 2014. "The impact of the French Tobin tax," Journal of Financial Stability, Elsevier, vol. 15(C), pages 127-148.
    3. Stephan Schulmeister, 2011. "Implementation of a General Financial Transactions Tax," WIFO Studies, WIFO, number 41992.
    4. Ms. Thornton Matheson, 2011. "Taxing Financial Transactions: Issues and Evidence," IMF Working Papers 2011/054, International Monetary Fund.
    5. Capelle-Blancard, Gunther, 2017. "Curbing the growth of stock trading? Order-to-trade ratios and financial transaction taxes," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 49(C), pages 48-73.
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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