Taxing financial transactions in a globalized world

Abstract

As far as taxes on securities transactions are concerned, the most important international tax experiment in history is currently taking place within the European Union. The proposed tax covers most financial instruments in ten Member States. In light of the fact that the process of implementing this general and coordinated European tax has not yet been completed, countries such as France and Italy have unilaterally established stock exchange taxes. Spain is also joining this club. This article reviews some for and against arguments on the establishment of this tax figure, and anticipates the effects it may have on market liquidity in the Spanish case.

Keywords:

Securities transaction tax, financial transaction tax, Tobin tax, liquidity, volatility, equity