Chapter 6: Securities transaction tax in Europe: first impact assessments
The idea to tax financial transactions is an old chestnut, but it has received a renewed interest in the aftermaths of the global financial crisis. In 2011, the European Commission had presented a plan to introduce a financial transaction tax (FTT) at the EU level. The proposal was ambitious and generated intense criticism. After discussions failed to achieve unanimous support, 11 out of the 27 EU member states decided to move forward with the EU FTT under enhanced cooperation. The EU FFT has been initially scheduled to be introduced at the beginning of 2014, but it is still postponed (see Gabor, 2013). In the meanwhile, securities transaction taxes (STT) have been introduced in France in August 2012, and in Italy in March 2013. Of course, the French and Italian STT have been carefully scrutinized, particularly their impact on trading volumes. Several press articles report a sharp decrease of traded value consecutive to the introduction of the STT in France and Italy. Opponents to the taxation of financial transactions have used this preliminary evidence to decry a measure deemed counterproductive, arguing that a decrease of the value of shares traded will hurt market quality. Actually, the decline in traded value is nothing but a surprise. But, it will be wrong to conclude so far that the introduction of SST has been harmful.
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