Taxing Financial Transactions: Issues and Evidence

Abstract

In reaction to the recent financial crisis, increased attention has recently been given to financial transaction taxes (FTTs) as a means of (1) raising revenue for a variety of possible purposes and/or (2) helping to curb financial market excesses. This paper reviews existing theory and evidence on the efficacy of an FTT in fulfilling those tasks, on its potential impact, and on key issues to be faced in designing taxes of this kind.

Keywords: Cross country analysis, Economic models, Financial assets, Financial sector, Group of Twenty, Revenue measures, Securities markets, Stock markets, Tax rates, Taxation, Taxes