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Will the financial transaction tax (FTT) enhance stability? CEPS Commentary, 4 October 2011

Arbak, Emrah. (2011) Will the financial transaction tax (FTT) enhance stability? CEPS Commentary, 4 October 2011. [Policy Paper]

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    Abstract

    In all likelihood, the European Commission’s proposed tax on financial services, the financial transaction tax (FTT), will raise sizeable tax revenues, which explains its political appeal in the current context. However, the tax fails to address the key factors that contributed to the global financial crisis. In the absence of global or even EU-wide cooperation, many of the transactions subject to a tax will relocate to non-cooperating countries, thereby reducing revenue prospects and the effectiveness of supervision. Moreover, the proposal fails to address the growth of leverage, systemic risks and the moral hazard risks arising from ‘too-big-to-fail’ or ‘too-systemic-to-fail’ institutions. Even if it becomes a reality, the proposal should not undermine the chances of more meaningful tax policy alternatives being implemented in the future.

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > tax policy
    EU policies and themes > External relations > international economy
    EU policies and themes > Policies & related activities > economic and financial affairs > Single Market > capital, goods, services, workers
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Commentaries
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 07 Oct 2011 12:48
    Number of Pages: 5
    Last Modified: 07 Oct 2011 12:48
    URI: http://aei.pitt.edu/id/eprint/32553

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