Gunther Capelle-Blancard, The taxation of financial transactions: An estimate of global tax revenues
A new note by economist Gunther Capelle-Blancard shows that a financial transaction tax similar to the French FTT or the UK stamp duty, applied to G20 countries, could raise between €156 and €260 billion per year. The analysis reveals that these revenues could rise to nearly €400 billion per year by extending this international FTT to intraday transactions and high frequency trading.
The financial transaction tax (FTT) is often thought of as a utopian idea whose implementation would create an insurmountable obstacle for financial markets. However, stock market transactions in the United Kingdom have been taxed since the seventeenth century, in the form of a stamp duty that generates around €4 billion annually, without hindering the City’s development. Virtually all developed countries have used it at some point, and even today, more than thirty countries in the world tax financial transactions, including Switzerland, Hong Kong, Taiwan, and France.
Actually, the FTT appears to be a good tax, with low distortion, high potential tax revenues, and minimal collection costs. It also has a redistributive effect. The UK stamp duty or the French FTT equivalent applied by the G20 countries, despite numerous exemptions, would generate between €156 and €260 billion per year (based on a nominal rate of 0.3% or 0.5%). Extending the tax to derivatives and intraday trades would increase revenue while improving
transparency in financial markets
Gunther Capelle-Blancard, The taxation of financial transactions: An estimate of global tax revenues, Centre d’Economie de la Sorbonne Working Papers, CES WP n° 2023.09R, 2023, 23 p.