Socializing Global Economic Governance: Introducing a Financial Transaction Tax

The uncontrolled exponential growth of the financial sector and its rapid globalization led to an equally rapid increase in challenges to the global financial system. The already undertaken measures aimed at improving financial stability are necessary, yet not sustainable enough. The aim of this article is to provide more analytical arguments to favour another solution – the introduction of the Financial Transaction Tax (FTT), and to increase the public and academic awareness of the necessity of such a measure. The ongoing reforms do not solve the key problem – the enormous cost to rescue the financial sector, subsidized to a large extent by the taxpayer, and the absence of a fair contribution from the financial sector. FTT as a tool to discourage excessive speculation without hindering other activities seems to be a socially responsible measure working for financial stability at the same time. To efficiently socialize its impact, however, it is critical to define exact patterns of spending of the funds raised by the states.

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Financial Transaction Tax: Determination of Economic Impact Under DSGE Model

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201563020627 ◽

2015 ◽

Vol 63 (2) ◽

pp. 627-637 ◽

Cited By ~ 2

Author(s):

Veronika Solilová ◽

Danuše Nerudová

Keyword(s):

Economic Growth ◽

Economic Impact ◽

Financial Sector ◽

The United States ◽

Dsge Model ◽

Tax Rate ◽

Financial Transaction ◽

Financial Transaction Tax ◽

Transaction Tax

The discussion about the possible taxation of the financial sector has started in the European Union as a result of the financial crisis which has spread to the Europe from the United States in 2008 and consequently of the massive financial interventions by governments made in favour of the financial sector. On 14 February 2013, after rejection of the draft of the directive introducing a common system of financial transaction tax in 2011, the European Commission introduced the financial transaction tax through enhanced cooperation. The aim of the paper is to research economic impact of financial transaction tax on EU (EU27 or EU11) with respect to the DSGE model which was used for the determination of impacts. Based on our analysis the DSGE model can be considered as underestimated in case of the impact on economic growth and an overestimated in case of the revenue collection. Particularly, the overall impact of the financial transaction tax considering cascade effects of securities (tax rate 2.2%) and derivatives (tax rate 0.2%) is ranged between −4.752 and 1.472 percent points of GDP. And further, is assumed that the relocation effects of business/trade can be in average 40% causes a decline of expected tax revenues in the amount of 13bn EUR. Thus, at a time of fragile economic growth across the EU and the increased risk of recession in Europe, the introduction of the FTT should be undesirable.

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Financial sector taxation: Financial activities tax or financial transaction tax?

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201159020205 ◽

2011 ◽

Vol 59 (2) ◽

pp. 205-212 ◽

Cited By ~ 2

Author(s):

Danuše Nerudová

Keyword(s):

Value Added ◽

Financial Sector ◽

Point Of View ◽

Substantial Contribution ◽

Financial Transaction ◽

Financial Transaction Tax ◽

Pros And Cons ◽

The Stability ◽

Transaction Tax ◽

The Eu

The recent financial crises has revealed the need to improve and ensure the stability of the financial sector to reduce negative externalities, to ensure fair and substantial contribution of the financial sector to the public finances and the need to consolidate public finance. All those needs represent substantial arguments for the discussion about the introduction of financial sector taxation. There are discussed in the paper two possible schemes of financial sector taxation – financial transaction tax and financial activities tax. The aim of the paper is to research the possibility of the introduction of financial sector taxation, to discuss the pros and cons of two major candidates on financial sector taxation – financial transaction tax and financial activities tax and to suggest the possible candidate suitable for the implementation on the EU level. Financial transaction tax represents the tool suitable mainly on global level, for only in that case enables generate sufficient financial resources. From EU point of view is considered as less suitable, for it bears the risk of reallocation. Therefore the introduction of financial activities tax on EU level is considered as a better solution for the financial sector taxation in the EU, for financial sector is exempted from value added tax. With respect to the fact, that the implementation would represent the innovative approach to the financial sector taxation, there are no empirical proves and therefore this could be the subject of further research.

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