2210 Tax on foreign exchange transactions

CAMBRIDGE European leaders are seriously considering a Tobin tax, which would put a small levy on financial transactions, thereby dampening trading.

An FTT is most suitable for such a venture for two reasons.

Consider, for example, a tax of 0.25 applied to all cross border financial transactions.

A leading policymaker in the Anglo American empire of finance actually came out in support of a Tobin tax a global tax on financial transactions.

The emotional appeal of a tax on all financial transactions is undeniable.

Revenue estimates for a small tax on international currency transactions run into hundreds of billions of dollars per year.

Another possibility is that the Europeans concluded that an FTT s political advantages outweigh its economic flaws.

Existing proposals include a Robin Hood tax on financial transactions, a share of the profits from the EU s carbon emissions trading scheme, or a larger take from value added tax receipts.

CAMBRIDGE European leaders are seriously considering a Tobin tax, which would put a small levy on financial transactions, thereby dampening trading. But will the tax do as much as its proponents hope?

With this battle won, the next worthy goal is a global financial transaction tax.

But the FTT, despite its noble intellectual lineage, is no solution to Europe s problems or to the world s.

The third aim could be achieved country by country, but it is certainly arguable that an across the board banking levy, or a Europe wide financial transaction tax, would eliminate competitive distortions.

As a bonus, an FTT will curb destabilizing speculation in financial markets.

As a result, the ultimate revenue gains are likely to prove disappointing, as Sweden discovered when it attempted to tax financial transactions two decades ago.

It is time for an international tax on bank profits perhaps implemented as a levy on international financial transactions which would raise tens of billions of dollars each year.

True, great thinkers like John Maynard Keynes and the late Nobel laureate James Tobin floated various ideas for taxing financial transactions as a way to reduce economic volatility.

Moreover, a high corporate tax rate is an ineffective and costly tool for producing revenues, owing to innovative financial transactions and legal tax avoidance mechanisms.

CAMBRIDGE Something happened in late August that I never thought I would see in my lifetime. A leading policymaker in the Anglo American empire of finance actually came out in support of a Tobin tax a global tax on financial transactions.

For example, a so called Tobin tax on financial transactions is a frequently proposed solution, but it is not a policy solution that could be implemented by corporate law judges.

Unfortunately, much as FTTs are the darling of leading liberal economic commentators and Robin Hood NGOs, they are an extremely misguided approach to achieving such worthy ends.

We propose an education investment bank to be established with the cooperation of the GPE and major international investment banks, capitalized in part by proceeds from a financial transaction tax (FTT), such as that proposed for the European Union.

After all, there certainly is a case to be made that an FTT has so much gut level popular appeal that politically powerful financial interests could not block it.

More broadly, FTTs violate the general public finance principle that it is inefficient to tax intermediate factors of production, particularly ones that are highly mobile and fluid in their response.

The European Commission has surely been strongly cautioned by the Fiscal Affairs Department at the International Monetary Fund, whose economists have thoroughly catalogued the pros and cons of FTTs.

Taxing the Israeli Occupation

2260 Tax on transport facilities

But the results often fall short of the potential benefits, because VAT has helped inspire tax evaders to create even stronger networks that can hide an entire chain of transactions.

Under the FairTax, the federal government would be able to concentrate tax enforcement efforts on a single tax.

A tax called a death tax is regarded very differently from a tax called an inheritance tax, even though the two are really identical.

IEEE Transactions on Education, Vol.

An Energy Tax for Europe

Developing nations should also push for a Tobin tax a tax on global foreign currency transactions.

Pulling the OMT Trigger

Turner, voicing his concerns about the size of the financial sector and its frequently obscene levels of compensation, said he thought a global tax on financial transactions might help curb both.

It is true that Latin American governments, particularly the Brazilian authorities, succeeded in raising more revenue from taxes on bank withdrawals (a crude version of an FTT) than most policy analysts thought possible.

Innovative proposals mentioned for financing social development included the creation of a tax on international transactions, a scheme for an international finance facility to improve the coordination and transparency of aid flows and programmes of exchange of debt relief for social development initiatives.

There is, in short, ample reason to be angry at financiers, and real change is needed in how they operate. But the FTT, despite its noble intellectual lineage, is no solution to Europe s problems or to the world s.

(d) Simplification of the administration of transaction and lower transaction costs.

An Inequality Tax

The third change is a tax on the financial sector, in the form of a Financial Activities Tax on profits and remuneration at big banks that enjoy implicit government guarantees.

The world should implement a global bank tax.

Recently, the IMF proposed a new global tax on financial institutions loosely in proportion to their size, as well as a tax on banks profits and bonuses.

An additional excise duty (AED, not to be confused with the SED) is levied on goods of special importance.

As of now, Europe s Tobin tax proposals are not well targeted. Sound transactions would be taxed along with destabilizing, overnight financing of fragile financial institutions.