IfW Kiel on the EU Financial Transaction Tax: “Instrument suitable, proposed implementation flawed”

According to a recent German-French proposal, a financial market transaction tax (FTT) at a rate of 0.2% on the purchase of securities is to be introduced in 10 EU countries, including Germany, and limited to shares in large companies. In their study, the authors of the Kiel institute for the world economy compare this proposal in an international perspective, assess its strengths and weaknesses on the basis of empirical evidence and develop policy recommendations.


The introduction of a European Union financial transaction tax at a rate of 0.2 percent can generally be supported. However, the concept laid out by Germany and France has serious weaknesses that would limit revenue, discriminate against traditional equity Investment, and create incentives to circumvent the tax, according to the conclusion of an expert opinion by Kiel Institute.


The complete policy paper is available — here.

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