Countercyclical Policies

EU do it!

Tags: 
News Comment
Financial Transaction Taxes
Countercyclical Policies
Tax Evasion
Bank Levies
Information
Austerity

''Dear Ms. Merkel and Mr. Sarkozy,

While the US has embarked on a significant overhaul of its financial system and China has been growing at a blistering pace, the EU is lagging behind both on financial reform and on kick-starting growth. We have been too busy fighting fires partly of our own making.

Meanwhile our new-found enthusiasm for austerity measures is sure to stoke even more fires and has already sparked widespread social unrest across the Union.

The EU's citizens are mature enough to understand the need for some belt-tightening, but they resent the fact that the financial sector that is responsible for our misery is getting away scot-free.

A FIT Proposal - Financial Instrument Taxes

Tags: 
News Comment
Bank Levy
Financial Transaction Tax
High Frequency Trading
Financial Instrument Tax
Countercyclical Policies
Tax Evasion
Fiscal Deficis

The world has woken up to an urgent fiscal challenge. Budget cuts will soon start to bite at home in Europe, while funding for international development and tackling climate change has already been cut. Meanwhile, the financial system that got us into this fiscal mess remains largely unreformed, with proposed changes largely neglecting the issue of systemic risks posed by financial markets in favour of ‘quick fix’ changes to the banking system. Even less has been done to align finance with the real economy.

Implementing a series of Financial Instrument Taxes (FITs) offers a highly flexible toolkit to help achieve progress on all three fronts. These are similar to, but broader than, the widely-discussed financial transaction taxes (FTTs), and can be tailored to the idiosyncrasies of particular markets. For example, more liquid markets in stocks, futures and certain derivatives will be taxed on a per transaction basis, whereas illiquid securitized products, mortgages and OTC derivatives would be taxed on issuance.