By the late 1990s, the term Tobin tax was being applied to all forms of short term transaction taxation, whether across currencies or not. The concept of the Tobin tax is being picked up by various tax proposals currently being discussed, amongst them the European Union Financial Transaction Tax as well as the Robin Hood tax. Opinions are divided between those who applaud that the Tobin tax could protect countries from spillovers of financial crises, and those who claim that the tax would also constrain the effectiveness of the global economic system, increase price volatility, widen bid–ask spreads for end users such as investors, savers and hedgers, and destroy liquidity. Tobin observed that, while his original proposal had only the goal of “putting a brake on the foreign exchange trafficking”, the antiglobalization movement had stressed “the income from the taxes with which they want to finance their projects to improve the world”.

This was widely viewed as a warning to curb shorting of its currency the yuan. It was however expected to keep this tax at 0% initially, calculating potential revenue from different rate schemes and exemptions, and not to impose the actual tax unless speculation increased. Financial transaction tax rates of the magnitude of 0.1%-1% have been proposed by normative economists, without addressing the practicability of implementing a tax at these levels. In positive economics studies however, where due reference was paid to the prevailing market conditions, the resulting tax rates have been significantly lower. Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%.

The volume of futures trading fell by 98% and the options trading market disappeared. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the fortfs forex taxes were eliminated, trading volumes returned and grew substantially in the 1990s. The Swedish experience of a transaction tax was with purchase or sale of equity securities, fixed income securities and derivatives.

• James Tobin’s interview with Radio Popolare was quoted by the Italian foreign minister at the time, former director-general of the World Trade Organization Renato Ruggiero, during a Parliamentary debate on the eve of the G summit in Genoa.
• Examples are used only to help you translate the word or expression searched in various contexts.
• The International Trade Union Confederation/Asia-Pacific Labour Network (ITUC/APLN), the informal trade union body of the Asia-Pacific, supported the Tobin Tax in their Statement to the 2010 APEC Economic Leaders Meeting.
• Tobin suggested his currency transaction tax in 1972 in his Janeway Lectures at Princeton, shortly after the Bretton Woods system of monetary management ended in 1971.

This action created the situation whereby the U.S. dollar became the sole backing of currencies and a reserve currency for the member states of the Bretton Woods system, leading the system to collapse in the face of increasing financial strain in that same year. In that context, Tobin suggested a new system for international nonfarm payrolls forecast currency stability, and proposed that such a system include an international charge on foreign-exchange transactions. Hanke et al. state, “The economic consequences of introducing a [currency-only] Tobin Tax are […] completely unknown, as such a tax has not been introduced on any real foreign exchange market so far”.

Is the tax easy to avoid?

If these deposit requirements result in forfeits or losses if a currency suddenly declines due to speculation, they act as inhibitions against deliberate speculative shorts of a currency. The cost of currency hedges—and thus “certainty what importers and exporters’ money is worth”—has nothing to do with volatility whatsoever, as this cost is exclusively determined by the interest rate differental between two currencies. Nevertheless, as Tobin said, “If … is suddenly withdrawn, countries have to drastically increase interest rates for their currency to still be attractive.” However, on November 7, 2009, at the G20 finance ministers summit in Scotland, Dominique Strauss-Khan, head of the International Monetary Fund, said “transactions are very difficult to measure and so it’s very easy to avoid a transaction tax.” Frank then corroborates Tobin’s comments on the problems this instability can create (e.g. high interest rates) for developing countries such as Mexico , countries in South East Asia , and Russia .

In global international currency trading, however, the situation could, some argue, look quite different. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s and 2000s. The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million.

Tobin’s original proposal

In Soros’ scheme, rich countries would pledge SDRs (which are denominated as a basket of multiple ‘hard’ currencies) for the purpose of providing international assistance. He stated, “I think there is a case for a Tobin tax … it is not at all clear to me that a Tobin tax would reduce volatility in the currency markets. It is true that it may discourage currency speculation but it would also reduce the liquidity of the marketplace.” In this Soros appeared to agree with the Chicago School. The original Tobin Tax idea of using a financial transaction tax for development aid has also strongly resurfaced. Volcker endorsed only the UK’s tax on bank bonuses, calling it “interesting”, but was wary about imposing levies on financial market transactions, because he is “instinctively opposed” to any tax on financial transactions.

Jackson and O’Donnel , using UK quarterly data, found that the 1% cut in the Stamp Duty in April 1984 from 2% to 1% lead to a “dramatic 70% increase in equity turnover”. Analyzing all three Stamp Duty rate changes, Saporta and Kan found that the announcements of tax rate increases were followed by negative returns, but even though these results were statistically significant, they were likely to be influenced by other factors, because the announcements were made on Budget Days. Bond et al. confirmed the findings of previous studies, noting also that the impact of the announced tax rate cuts was more beneficial in case of larger firms, which had higher turnover, and were therefore more affected by the transaction tax than stocks of smaller companies, less frequently traded. In January 1989, a considerably lower tax of 0.002% on fixed-income securities was introduced for a security with a maturity of 90 days or less. In 2003, researchers like Aliber et al. proposed that empirical evidence on the observed effects of the already introduced and abolished stock transaction taxes[where? They did not find any evidence on the differential effects of introducing or removing, stock transactions taxes or a hypothetical currency tax on any subset of markets or all markets.

He estimates that any financial tax should be at most one basis point so as to have negligible effect on hedging. ATTAC and other organizations have recognized that while they still consider Tobin’s original aim as paramount, they think the tax could produce funds for development needs in the South , and allow governments, and therefore citizens, to reclaim part of the democratic space conceded to the financial markets. On June 15, 2004, the Commission of Finance and Budget in the Belgian Federal Parliament approved a bill implementing a Spahn tax. According to the legislation, Belgium will introduce the Tobin tax once all countries of the eurozone introduce a similar law. In July 2005 former Austrian chancellor Wolfgang Schüssel called for a European Union Tobin tax to base the communities’ financial structure on more stable and independent grounds. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement.

Nevertheless, in early December 2009, economist Stephany Griffith-Jones agreed that the “greater centralisation and automisation of the exchanges and banks clearing and settlements systems … makes avoidance of payment more difficult and less desirable.” In an interview given to the Italian independent radio network Radio Popolare in July 2001 James Tobin distanced himself from the global justice movement. «There are agencies and groups in Europe that have used the Tobin Tax as an issue of broader campaigns, for reasons that go far beyond my proposal.

Tobin tax

Sterling Stamp Duty supporters argue that this tax rate would not adversely affect currency markets and could still raise large sums of money. On June 28, 2010, the European Union’s executive said it will study whether the European Union should go alone in imposing a tax on financial transactions after G20 leaders failed to agree on the issue. Nevertheless, Britain, France and Germany had already agreed before the summit to impose a “bank tax.” On May 20, 2010, German officials were understood to favour a financial transaction tax over a financial activities tax. It would have a very significant negative impact on real economic recovery, as these additional costs are likely to further reduce financing of business activities at a time when markets remain fragile and prospects for the global economy are still uncertain. According to Stephen Spratt, “the revenues raised could be used for … international development objectives … such as meeting the Millennium Development Goals.”(, p. 19) These are eight international development goals that 192 United Nations member states and at least 23 international organizations have agreed to achieve by the year 2015.

In January 1984, Sweden introduced a 0.5% tax on the purchase or sale of an equity security. In January 1989, a considerably lower tax of 0.002% on fixed income securities was introduced for a security with a maturity of 90 days or less. James Tobin’s purpose in developing his idea of a currency transaction tax was to find a way to manage exchange-rate volatility. However, the term “high-frequency” implied that only a few large volume transaction players engaged in arbitrage would likely be affected. Clinton referred separately to “Impose a risk fee on the largest financial institutions. Big banks and financial companies would be required to pay a fee based on their size and their risk of contributing to another crisis.” The calculations of such fees would necessarily depend on financial risk management criteria . Because of its restriction to so-called “harmful high-frequency trading” rather than to inter-currency transactions, neither of Clinton’s proposals could be considered a true Tobin tax though international exposure would be a factor in the “risk fee”.

Tobin’s method of “throwing sand in the wheels” was to suggest a tax on all spot conversions of one currency into another, proportional to the size of the transaction. In the development of his idea, Tobin was influenced by the earlier work of John Maynard laughing at wall street Keynes on general financial transaction taxes. The financial transaction tax would be separate from a bank levy, or a resolution levy, which some governments are also proposing to impose on banks to insure them against the costs of any future bailouts.

Variaciones de la idea de la tasa Tobin[editar]

Stiglitz said, the tax is “much more feasible today” than a few decades ago, when Tobin recanted. In those same “years” that Buiter spoke of, the Tobin tax was also “adopted” or supported in varying degrees by the people who were not, as he put it, “enemies of trade liberalisation.” Among them were several supporters from 1990 to 1999, including Larry Summers and several from 2000 to 2004, including lukewarm support from George Soros. In early November 2007, a regional Tobin tax was adopted by the Bank of the South, after an initiative of Presidents Hugo Chávez from Venezuela and Néstor Kirchner from Argentina. The proposal supported by the eleven EU member states, was approved in the European Parliament in December 2012, and by the Council of the European Union in January 2013. The formal agreement on the details of the EU FTT still need to be decided upon and approved by the European Parliament.

Lanne and Vesala argue that a transaction tax “is likely to amplify, not dampen, volatility in foreign exchange markets”, because such tax penalises informed market participants disproportionately more than uninformed ones, leading to volatility increases. In July, 2006, analyst Marion G. Wrobel examined the actual international experiences of various countries in implementing financial transaction taxes. Wrobel’s paper highlighted the Swedish experience with financial transaction taxes.