FINANCIAL WORLD

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) on the purchase of securities is to be introduced in 10 EU countries. In their study, the authors of the Kiel institute for the world economy compare this proposal in an international perspective and develop policy recommendations.

BY

MARC ADAM

PUBLISHED

10. MARCH 2020

READING TIME

1 MIN

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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More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.

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