Financial transaction tax
What is it?
A very small levy on high-frequency financial transactions such as share-trading and currency speculation.
What is the problem that this change would seek to address?
Globally, an enormous number of financial transactions are unproductive or indeed harmful, as became clear during the GFC. A financial transaction tax would “throw sand” in the wheels of global finance, deliberately slowing it down and – it is hoped – reducing the number of unnecessary or harmful transactions, while generating revenue for the public good.
What are the advantages?
As above, it could help limit speculation and other undesirable practices. It would largely affect those most directly involved in financial transactions, who are disproportionately well-off.
What are the disadvantages?
Financial activities of this sort are very fluid, and if a tax were imposed on such transactions in one country, it would be easy for those transactions to be “routed” through another. A financial transactions tax is very difficult to impose without global coordination.
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