Financial Transaction Tax

eire4

There has been more and more talk recently of bringing in a European wide Financial transaction tax. Personally I think this would be a great idea. Even a very small tax would bring in large sums each year. I am not saying this would be a panacea. But I think it would be a very good way to raise revenue and also it puts some of the current burden back on to the bankers and wall street firms who caused this mess.
The proposed European tax is estimated to raise about 57billion euro a year. Certainly a very healthy sum which could be used to help Europe get it's finances back in order. This is based on a
0.1% tax on the trading of stocks and bonds.

carveone

That depends on how they screw it up. Eg if they tax stocks and bonds and ignore derivatives that would end up increasing volatility and removing liquidity. When I googled for those terms you mentioned, unfortunately, that is what I found - percentage taxes on stocks.

Whenever they do things like this, there ends up being "special" exemptions. You know what I mean - oh, "I'm a wholesale trader, I'm a bank, I have a seat on the exchange, I know someone in high places...". I'm depressing myself when I say these things but I know it would happen - the real economy is being throttled by the financial sector and it's politically sanctioned.

I would like to see a flat financial transaction tax enacted, like €1 paid on the buy side with absolutely no exemptions. None. For anyone. It's the cost of doing business. That money should go to regulation.

I have a trading account and dabble a bit. It costs me $9.99 to buy or sell stocks or derivatives. It would be ok to me to cost $10.99 on the buy side if it killed off the bots and bloody HFT traders. You can't invest long term any more - as soon as you look away a computer is there pinching your money. If you are in the market long enough you can actually see when the algorithms trigger - I've seen the Dow move 100 points in 5 minutes at the close. Stocks like BKS and even MS have daily price swings of +/- 6%. That's just insane.

The financial system needs reform and balance otherwise sustainable economic recovery is a pipe dream...

View

I'd start it off slowly - say, confine it to currency trading only at, say, 1%. After that, it could increase to 2.5% over a couple of years.

Of course, we could give an exemption on it to EU member states who are members of the ERM II mechanism and who have set a date for adopting the Euro.

eire4

eire4 wrote: »

There has been more and more talk recently of bringing in a European wide Financial transaction tax. Personally I think this would be a great idea. Even a very small tax would bring in large sums each year. I am not saying this would be a panacea. But I think it would be a very good way to raise revenue and also it puts some of the current burden back on to the bankers and wall street firms who caused this mess.
The proposed European tax is estimated to raise about 57billion euro a year. Certainly a very healthy sum which could be used to help Europe get it's finances back in order. This is based on a
0.1% tax on the trading of stocks and bonds.

Yeah it would be brilliant, it would barely affect any euro economy except the city of London and cause an exodus of companies from there.

Its a ludicrous idea that would hit one country to such an unfair degree the mind boggles as to how it was even suggested. If you do it then the whole world has to agree.

Wall st didn't cause this mess, governments spending money they didn't have and increasing the money they spent that they didn't have to spend year upon year caused this.

oscarBravo

Carl Pitiful Advisor wrote: »

Wall st didn't cause this mess, governments spending money they didn't have and increasing the money they spent that they didn't have to spend year upon year caused this.

I think it would be a lot more accurate to say that both Wall Street and profligate governments caused this mess.

If someone is borrowing money they can't afford to repay, who is at fault? The borrower? The lender? Both?

eire4

Carl Pitiful Advisor wrote: »

Yeah it would be brilliant, it would barely affect any euro economy except the city of London and cause an exodus of companies from there.

Its a ludicrous idea that would hit one country to such an unfair degree the mind boggles as to how it was even suggested. If you do it then the whole world has to agree.

Wall st didn't cause this mess, governments spending money they didn't have and increasing the money they spent that they didn't have to spend year upon year caused this.

Well being fair yes Wall street didn't cause this mess by themselves. But they certainly played a big part. For instance recently we had a major oil executive admit before congress that up to as much as 30% of the price consumers paid at the pump was purely as a result of speculation on Wall street. This directly hurts the economy while some wall street firms put money in their pocket. It is time for the financial sector to pay it's share and I think the financial transactions tax can be part of that. It seems it has the ability to raise substantial sums which could be partly used to ensure proper market regulation to prevent the kinds of large scale frauds we have seen in recent years and used in other areas to help fix the mess we are in such as job creation schemes and other ways to stimulate our economies.

Now you say that such a tax would largely effect London and yes it would but only if their government continue to refuse to introduce the tax alongside the rest of the EU. Who's side do the English government want to be on. Protecting the financial firms and their profits while the rest of the English are facing significant cuts and austerity measures.

eire4

eire4 wrote: »

Well being fair yes Wall street didn't cause this mess by themselves. But they certainly played a big part. For instance recently we had a major oil executive admit before congress that up to as much as 30% of the price consumers paid at the pump was purely as a result of speculation on Wall street. This directly hurts the economy while some wall street firms put money in their pocket. It is time for the financial sector to pay it's share and I think the financial transactions tax can be part of that. It seems it has the ability to raise substantial sums which could be partly used to ensure proper market regulation to prevent the kinds of large scale frauds we have seen in recent years and used in other areas to help fix the mess we are in such as job creation schemes and other ways to stimulate our economies.

Now you say that such a tax would largely effect London and yes it would but only if their government continue to refuse to introduce the tax alongside the rest of the EU. Who's side do the English government want to be on. Protecting the financial firms and their profits while the rest of the English are facing significant cuts and austerity measures.

London is the biggest financial capital in the world, the rest of the EU put together doesnt even compare. How would it be fair that Britain would contribute 90% of the tax gained?

Say UK and Europe do introduce the tax like you suggest, the finance firms will move to the US, Singapore, Malaysia, Hong Kong or Japan where they will not be taxed. Do you think Merkel and Sarkozy will persuade those countries to introduce the tax aswell?

The wall st specualtion on commodities cannot be stopped because you cant stop people buying things in a free market, they just buy in large quantities.

*I should add I agree 100% on the tax but it would have to be implimented globaly.

carveone

For instance recently we had a major oil executive admit before congress that up to as much as 30% of the price consumers paid at the pump was purely as a result of speculation on Wall street.

CEO of Exxon, Rex Tillerson said that. linky. Said the fair price for oil was between $60 and $70bbl.

"The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds"

I note that Exxon pay negative tax in the US (ie they receive money).

Carl Pitiful Advisor wrote: »

London is the biggest financial capital in the world, the rest of the EU put together doesnt even compare. How would it be fair that Britain would contribute 90% of the tax gained?

They might consider it fair if they kept it

You could put a small levy on each transaction in the exchanges themselves. If you get the Dax, Cac, ftse, and all the us exchanges then what's the problem? If this were to drive more fruitless speculative companies to leave, and take more of their white collar con men with them, then frankly the rest of us would cheer.

Let them see how they fare in Asian countries when they are caught in one of their frauds or scams. I can't imagine it's pretty but at least their families can afford the cost of the bullet.

eire4

Carl Pitiful Advisor wrote: »

London is the biggest financial capital in the world, the rest of the EU put together doesnt even compare. How would it be fair that Britain would contribute 90% of the tax gained?

Say UK and Europe do introduce the tax like you suggest, the finance firms will move to the US, Singapore, Malaysia, Hong Kong or Japan where they will not be taxed. Do you think Merkel and Sarkozy will persuade those countries to introduce the tax aswell?

The wall st specualtion on commodities cannot be stopped because you cant stop people buying things in a free market, they just buy in large quantities.

*I should add I agree 100% on the tax but it would have to be implimented globaly.

Well the English look like they have boxed themselves into a corner on this one and whatever the EU do decide to do the English will just have to deal with it as they are off on there own now.

KINGVictor

eire4 wrote: »

Well the English look like they have boxed themselves into a corner on this one and whatever the EU do decide to do the English will just have to deal with it as they are off on there own now.

Is that how you are interpreting the events?

eire4

eire4 wrote: »

Well the English look like they have boxed themselves into a corner on this one and whatever the EU do decide to do the English will just have to deal with it as they are off on there own now.

How exactly have they boxed themselves in?

The English have done the correct thing and saved their financial services industry, Enda and the boys have ensured that Europe's Financial service industry will now be decimated and the city of London will now get all of these jobs that will be lost from Europe.

Most of these companys are American, do you think they will stay in Ireland/ Europe and pay this tax or move to London?

Its a no brainer.

View

Carl Pitiful Advisor wrote: »

How exactly have they boxed themselves in?

The English have done the correct thing and saved their financial services industry, Enda and the boys have ensured that Europe's Financial service industry will now be decimated and the city of London will now get all of these jobs that will be lost from Europe.

Cameron's price for agreeing that the changes could be made in the EU Treaties was that the UK would have a veto over all EU financial services regulations.

The other member states refused to pay the price and intend to proceed with a non-EU Treaty instead - in the meantime, that means the tax can be brought in under existing EU single market rules if there is a majority under QMV rules in favour of it (i.e. it cannot be vetoed).

Hence, Cameron's veto is largely pointless in terms of "saving the city".

KINGVictor

View wrote: »

Cameron's price for agreeing that the changes could be made in the EU Treaties was that the UK would have a veto over all EU financial services regulations.

The other member states refused to pay the price and intend to proceed with a non-EU Treaty instead - in the meantime, that means the tax can be brought in under existing EU single market rules if there is a majority under QMV rules in favour of it (i.e. it cannot be vetoed).

Hence, Cameron's veto is largely pointless in terms of "saving the city".

You don't seem convinced with your own position, understandably.

You said that:
that means the tax can be brought in under existing EU single market rules if there is a majority under QMV rules in favour of it...

Finland opposes QMV in relation to the inter-governmental agreement:

http://www.helsinkitimes.fi/htimes/domestic-news/politics/17507-finlands-grand-committee-to-rule-on-eu-majority-voting-.html

Have you considered the legal ramifications? The UK says that the 26 member countries cannot use EU insitutions to pursue an agreement. Indeed even EU federalists have threatened to go to court over it.

The communique by the Commission states that 9 of the non-EZ countries have signified their interest of participating in the agreement. However, the reality is that the Czech Republic, Hungary and Sweden have to consult their parliaments.

Do you think that the agreement reached on Friday is enough to save the Euro?

eire4

Carl Pitiful Advisor wrote: »

How exactly have they boxed themselves in?

The English have done the correct thing and saved their financial services industry, Enda and the boys have ensured that Europe's Financial service industry will now be decimated and the city of London will now get all of these jobs that will be lost from Europe.

Most of these companys are American, do you think they will stay in Ireland/ Europe and pay this tax or move to London?

Its a no brainer.

They have boxed themsleves in because now they have limited the voice they have at the table by refusing to come on board with the rest of the EU which could well end up going ahead with the tax regardless of Englands views.