A Financial Transactions Tax: Inefficient or Needed Systemic Reform?

52 Pages Posted: 24 Dec 2011 Last revised: 10 Nov 2016

See all articles by Ross P. Buckley

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Gill North

Deakin University, Geelong, Australia - Deakin Law School

Date Written: November 8, 2011

Abstract

The European Commission has included a Eurozone financial transaction tax in its longterm budget, as a first step towards a global tax. This move was taken despite negative European Commission and International Monetary Fund staff reports, which concluded that a tax would reduce the efficiency of capital markets, and raise the cost of capital. The efficiency frameworks used in the staff reviews were unduly narrow. Markets work best when there are strong links between market trading and real economic activity. Of late, these links have become increasingly tenuous and latent market and financial system risks are mounting. Carefully calibrated legal and tax responses are required to change market behaviour. Such a tax as part of an integrated policy framework would reduce short-term momentum trading and promote longer-term investment that would better reflect underlying economic fundamentals. So we argue the European Commission is correct in proposing to adopt such a tax.

Suggested Citation

Buckley, Ross P. and North, Gill, A Financial Transactions Tax: Inefficient or Needed Systemic Reform? (November 8, 2011). 43 Georgetown Journal of International Law 745; UNSW Law Research Paper No. 2011-53. Available at SSRN: https://ssrn.com/abstract=1975590

Ross P. Buckley (Contact Author)

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Gill North

Deakin University, Geelong, Australia - Deakin Law School ( email )

221 Burwood Highway
Burwood
Burwood, Victoria 3125, Victoria 3125
Australia

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