One non-tax regulatory equivalent of Tobin's narrow tax, to require "non-interest bearing deposit requirements on all open foreign exchange positions", was considered in particular but rejected. Īs the EU, European free trade, and Euro came together, various financial transaction taxes were considered openly. The Automated Payment Transaction tax proposal was presented to the President's Advisory Panel on Federal Tax Reform in 2005. The goal of the APT tax is to significantly improve economic efficiency, enhance stability in financial markets, and reduce to a minimum the costs of tax administration (assessment, collection, and compliance costs). Since financial transactions account for the greatest component of the APT tax base, and since all financial transactions are taxed, the proposal eliminates substitution possibilities for evasion and avoidance. Feige's Automated Payment Transaction tax (APT tax) proposed taxing the broadest possible tax base at the lowest possible tax rate. Feige proposed extending the tax reform ideas of John Maynard Keynes, James Tobin and Lawrence Summers, to their logical conclusion, namely to tax all transactions. In 1989, at the Buenos Aires meetings of the International Institute of Public Finance, University of Wisconsin-Madison Professor of Economics Edgar L. In that context, James Tobin, influenced by the work of Keynes, suggested his more specific currency transaction tax for stabilizing currencies on a larger global scale. In 1972 the Bretton Woods system for stabilizing currencies effectively came to an end. : 105 He proposed the levying of a small transaction tax on dealings on Wall Street, in the United States, where he argued excessive speculation by uninformed financial traders increased volatility (see Keynes financial transaction tax below). In 1936, in the wake of the Great Depression, John Maynard Keynes advocated the wider use of financial transaction taxes. By 2020, all major economies have moved to the GST (Goods and Services Tax) based tax system. This was doubled to 0.4% (40 bips) in 1932, in the context of the Great Depression, then eliminated in 1966. Instead of a fixed tax amount per transaction, the tax was in the amount of 0.2% of the transaction value (20 basis points, bips). The United States instituted a transfer tax on all sales or transfers of stock in The Revenue Act of 1914 (Act of 22 October 1914 (ch. In 1893, the tax rates were 0.06% for securities and commodities and 0.03% for bonds. In 1893, the Japanese government introduced the exchange tax, which continued until 1999. As of 2011, it is the oldest tax still in existence in Great Britain. The tax was payable by the buyer of shares for the official stamp on the legal document needed to formalize the purchase. The year 1694 saw an early implementation of a financial transaction tax in the form of a stamp duty at the London Stock Exchange. History John Maynard Keynes (1933) envisaged the financial transaction tax in 1936. In 2011 there were 40 countries that made use of FTT, together raising $38 billion (€29bn). Some are domestic and meant to be used within one nation whereas some are multinational. Concepts are found in various organizations and regions around the world. Some have been implemented, while some are only proposals. There are several types of financial transaction taxes. These distinctions are important in discussions about the utility of financial transaction tax as a tool to selectively discourage excessive speculation without discouraging any other activity (as John Maynard Keynes originally envisioned it in 1936). This tax is narrower in scope than a financial activities tax (FAT), and is not directly an industry or sector tax like a Financial stability contribution (FSC), or " bank tax", for example. If an institution carries out one such transaction, then it will be levied the tax for the one transaction. If an institution is never a party to a taxable transaction, then no transaction tax will be levied from it. Ī transaction tax is levied on specific transactions designated as taxable rather than on any other attributes of financial institutions. It is not usually considered to include consumption taxes paid by consumers. The tax has been most commonly associated with the financial sector for transactions involving intangible property rather than real property. A financial transaction tax ( FTT) is a levy on a specific type of financial transaction for a particular purpose.
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