First it was thought that findings from the Arrow-Debreu world applied: financial innovation would make the financial markets more complete and foster better management and distribution of risk. Two scientific opinions dominated the attitude of economists towards financial markets in the years prior to the financial crisis. ![]() The Paradigm of Efficient Financial Markets Is Dead Attempts at tax avoidance are, of course, inevitable, and therefore the effect of the tax should be monitored closely so that governments can react quickly if tax loopholes and tax-induced geographical relocation plans of financial institutions come to light. However, if, contrary to expectations, harmful transactions are not curbed, the FFT will at least generate large tax revenues that can contribute to covering the costs of the financial crisis. The FTT aims to reduce regulatory arbitrage, flash trades, overactive portfolio management, excessive leverage and speculative transactions of financial institutions – activities that have contributed to the financial crisis. ![]() With the tax, governments have an additional instrument at hand to influence trading activity. We argue in this Forum contribution that a financial transaction tax (FTT) complements financial market regulation. Finally, the paper by Ross Buckley analyses common myths, inaccuracies and untruths about the EU’s proposed FTT. Donato Masciandaro and Francesco Passarelli focus on how an FTT measure aimed at reducing financial systemic risk can cause political distortions, leading to inefficient and ineffective policies. John Vella identifies some commonly made claims about an FTT which are of questionable foundation and compares the FTT with some alternative taxes on the financial sector. The paper by Stephan Schulmeister discusses the essential features of a general FTT that will ensure that the more short-term oriented and riskier a transaction is, the greater the effect of the FTT on transaction costs. The FTT can therefore make an important contribution to preventing the decoupling of financial markets from the real economy. ![]() Dorothea Schäfer regards as the main policy goal of an FTT to be the prospect of slowing down the mutually reinforcing and growing trends of an increasing number of derivative products and shorter holding periods. This review will highlight the differences and similarities between different national taxes, and ultimately the possibilities of the EU’s Financial Transaction Tax Proposal becoming effective.Against the backdrop of the debate over the introduction of a financial transaction tax (FTT) in the European Union, this Forum is dedicated to the discussion of issues concerning the implementation and impact of such a tax on the financial sectors of the member states. This article focuses on the comparative experience of European States in the adoption of this type of tax. Evidence shows that the goal of harmonized taxation in this area is far from being achieved and that national decisions are based on two different models: a tax on the registration of certain transactions and a tax on financial transactions levied on the financial intermediaries involved in such transactions. ![]() This article details both the European Commission’s Proposals for Directives on Financial Transaction Tax, and the related taxes currently in force in Europe. The interest in new taxable events and the need to regulate financial markets’ functioning are two powerful reasons that support the application of this type of tax. Over the last two decades, the European Union (EU) and various European States have proposed or created several taxes aimed at increasing the overall tax burden to which the financial sector is currently subject. Financial Transaction Tax in Europe - EC Tax Review View Financial Transaction Tax in Europe by Gabriela Lagos Rodríguez - EC Tax Review Financial Transaction Tax in Europe Gabriela Lagos Rodríguez 30 4
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