International Experiences with Securities Transaction Taxes

42 Pages Posted: 27 Dec 2002 Last revised: 21 Jul 2010

See all articles by John Y. Campbell

John Y. Campbell

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Kenneth Froot

National Bureau of Economic Research (NBER); Harvard University - Business School (HBS)

Date Written: December 1993

Abstract

This paper studies the international experience with securities transaction taxes (STTs), using the Swedish and British systems as case studies. We argue that STTs are best thought of as taxes on different resources used in transactions: domestic brokerage services in the case of Sweden, and registration services in the British case. STTs give investors incentives to economize on the taxed resources by shifting trading to foreign markets or untaxed assets, or by reducing the volume of trade. We show that these effects can be important. Estimated revenues from an STT will be correspondingly overstated if they ignore such behavioral effects.

Suggested Citation

Campbell, John Y. and Froot, Kenneth, International Experiences with Securities Transaction Taxes (December 1993). NBER Working Paper No. w4587. Available at SSRN: https://ssrn.com/abstract=338864

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Kenneth Froot

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