News

One of the best experts on Financial Transaction Tax (FTT), Stephan Schulmeister, presented his latest study on the Financial Transaction Tax, answering the arguments against the implementation of a FTT by the possible destabilising effect of such a tax on prices discovery, capital costs and competition patterns. He also presented what its implementation framework should look like. Indeed, The FTT has shifted from a radical idea to a realistic proposition considered by the IMF, the European Commission, the G20 and a number of national governments.



During his latest visit to Brussels, at the end of June, Pr. Schulmeister, Economist at the Austrian Institute of economic research (WIFO), presented how the tax could be implemented in a decentralised way by a group of (EU or euro) countries without doing much harm to their own markets. Its implementation through financial transaction tax deduction at the banks and brokers level and eventually with the help of the implementation of a financial transaction tax substitute levy would not imply relocation effects.



This would still prevent notably “short term trading, conducted with very high leverage ratios” producing “prices trends which accumulate to long term trends, so that prices move in long swings around their fundamental equilibrium without any tendency to converge”.



In addition, the assertion that a financial transaction tax has the same effect as a tax on dividends is misleading because the latter would affect any stock, while the financial transaction tax would affect only those stocks which are frequently traded.



Europe is ready and would benefit from the Tax

While the implementation of a Financial Transaction Tax would curb the most leveraged and speculative activities, this would allow a more sustainable and stable financial system, while creating the revenue for sharing the burden of the crisis.



Supporting Pr. S. Schulmeister’s unchallenged model “for doing things in practice”, Poul Nyrup Rasmussen, President of the Party of European Socialists, also insisted on the strong political dynamic for implementing such a tax, which stems in particular from the trade union movement and ordinary citizens, who feel the tax is just and necessary from an economic point of view, and that the framework is ready to be implemented at the European level.





Pr. Stephan Schulmeister’s latest study:

http://www.wifo.ac.at/wwa/jsp/index.jsp?fid=23923&id=41992&typeid=8&display_mode=2



The video of the Pr. Stephan Schulmeister’s latest study

http://www.youtube.com/watch?v=UEmPbAjgL7g





For more information, please contact

Alain Bloëdt, Foundation for European Progressive Studies

alain.bloedt@feps-europe.eu

Tanja Buzek, Austrian Trade Union Federation

tanja.buzek@oegb-eu.at