Journal Article

Financial Transactions Tax: Panacea, Threat, or Damp Squib?

Patrick Honohan and Sean Yoder

in The World Bank Research Observer

Published on behalf of World Bank

Volume 26, issue 1, pages 138-161
Published in print February 2011 | ISSN: 0257-3032
Published online August 2010 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/lkq006
Financial Transactions Tax: Panacea, Threat, or Damp Squib?

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The authors argue that attempts to raise a significant percentage of gross domestic product in revenue from a broad-based financial transactions tax are likely to fail both by raising much less revenue than expected and by generating far-reaching changes in economic behavior. They point out that, although the side effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis. Accordingly, such taxes likely deliver both less revenue and less efficiency benefits than have sometimes been claimed by some. On the other hand, they may be less damaging than feared by others.

Keywords: G28; H25

Journal Article.  9343 words.  Illustrated.

Subjects: Financial Regulation ; Taxation, Subsidies, and Revenue

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