This article is about a tax levied on transactions in the financial sector. For APT Tax–a small tax levied on forex kapitalmärkte c transaction in an economy, see Automated Payment Transaction tax.
A financial transaction tax is a levy on a specific type of financial transaction for a particular purpose. So if an institution never carries out the taxable transaction, then it will never be subject to the transaction tax. There are several types of financial transaction taxes. Some have been implemented, while some are only proposals. Concepts are found in various organizations and regions around the world.
The year 1694 saw an early implementation of a financial transaction tax in the form of a stamp duty at the London Stock Exchange. The tax was payable by the buyer of shares for the official stamp on the legal document needed to formalize the purchase. Instead of a fixed tax amount per transaction, the tax was in the amount of 0. 1932, in the context of the Great Depression, then eliminated in 1966.
In 1936, in the wake of the Great Depression, John Maynard Keynes advocated the wider use of financial transaction taxes. In 1972 the Bretton Woods system for stabilizing currencies effectively came to an end. In that context, James Tobin, influenced by the work of Keynes, suggested his more specific currency transaction tax for stabilizing currencies on a larger global scale. In 1989, at the Buenos Aires meetings of the International Institute of Public Finance, University of Wisconsin-Madison Professor of Economics Edgar L. As the EU, European free trade and Euro came together, various financial transaction taxes were considered openly. One non-tax regulatory equivalent of Tobin’s narrow tax, to require “non-interest bearing deposit requirements on all open foreign exchange positions”, was considered in particularly but rejected. Automated Payment Transaction tax since it uniformly taxed all transactions.
However, disclosure had not kept pace with practices. Regulators and policy-makers and theorists by the 1990s had to deal with increasingly complex financial engineering and the “avoidance by change of product mix market participants would have an incentive to substitute out of financial instruments subject to the tax and into instruments not subject to it. Many theorists raised the issue that hedging and speculation were more of a spectrum than a distinct duality of goals. Some of these emphasized the automated nature of the trade.
FTT proposals often emerge in response to specific crisis. 2008, many economists, governments, and organizations around the world re-examined, or were asked to re-examine, the concept of a financial transaction tax, or its various forms. She also vowed to “Impose a risk fee on the largest financial institutions. Big banks and financial companies would be required to pay a fee based on their size and their risk of contributing to another crisis.
How such fees would be assessed, and whether they amounted to a tax, were an active topic of speculation in the financial community, which expected them to follow Basel III definitions with further refinements. Below are some of those general commonalities. The intended purpose may or may not be achieved. Curbing volatility of financial markets In 1936, when Keynes first proposed a financial transaction tax, he wrote, “Speculators may do no harm as bubbles on a steady stream of enterprise.