Eleven Eurozone countries recently decided to press ahead with the introduction of a system of taxing financial transactions (sometimes called a “Tobin Tax” after James Tobin, the Nobel-prize winning U.S. economist who first launched the idea).
This paper analyses the objectives and the feasibility of introducing financial transaction taxes in at least nine member countries of the EU under the so-called Enhanced Cooperation Procedure of the Lisbon Treaty. After a short description of the state of play in the autumn of 2012, the paper identifies three main rationales that would justify the introduction of an EU-FTT. First and foremost, the paper points to FTT as a means of stabilizing financial markets.
Secondly, a well-designed FTT could constitute an important new source of government revenue for socially beneficial use. Last but not least, the paper discusses to what extent savings in private pension systems would be likely to be affected by an FTT and how FTT can contribute to improving the allocation of savings by reducing administrative costs in parallel with the number of financial intermediaries.
(Text taken from ETUI's policy brief)
This paper has been written by Andreas Botsch, senior researcher on financial markets and macroeconomic policy at ETUI