Financial Transaction Taxes (FTTs) exist in many countries and in many forms. In a paper launched today, ASIFMA focuses on the Financial Transaction Tax debate and highlights the plethora of studies which have been conducted in various parts of the world.
This paper does not purport to cover all research studies conducted on all FTTs; however, the prevailing literature almost universally reaches very similar conclusions that the introduction of FTTs:
- Generates significantly less revenue than forecast
- Reduces asset prices and pension fund values
- Reduces trading volume, liquidity and certainty in financial markets
- Increases volatility through higher uncertainty, wider bid-ask spreads, and lower volume
- Lowers the attractiveness of the market for foreign firms
- Increases costs to companies through higher funding costs
- Increases costs to the end investor
Through this paper, ASIFMA recommends that any need to raise revenue would be better serviced by alternative mechanisms which would bring less disruption to the financial markets.