The financial transaction tax — Boon or bane?

Against the backdrop of the debate over the introduction of a fi nancial transaction tax (FTT)in the European Union, this Forum is dedicated to the discussion of issues concerning theimplementation and impact of such a tax on the fi nancial sectors of the member states.Dorothea Schäfer regards as the main policy goal of an FTT to be the prospect of slowingdown the mutually reinforcing and growing trends of an increasing number of derivativeproducts and shorter holding periods. The FTT can therefore make an important contributionto preventing the decoupling of fi nancial markets from the real economy. The paper byStephan Schulmeister discusses the essential features of a general FTT that will ensure thatthe more short-term oriented and riskier a transaction is, the greater the effect of the FTT ontransaction costs. John Vella identifi es some commonly made claims about an FTT which areof questionable foundation and compares the FTT with some alternative taxes on the fi nancialsector. Donato Masciandaro and Francesco Passarelli focus on how an FTT measure aimed at reducing fi nancial systemic risk can cause political distortions, leading to inefficient andineffective policies. Finally, the paper by Ross Buckley analyses common myths, inaccuraciesand untruths about the EU’s proposed FTT.[...