A General Financial Transaction Tax: A Short Cut Of The Pros, The Cons And A Proposal

The idea of introducing a general Financial Transaction Tax (FTT) has recently attracted rising attention. There are three reasons for this interest. First, the economic crisis was deepened by the instability of stock prices, exchange rates and commodity prices. This instability might be dampened by such a tax. Second, as a consequence of the crisis, the need for fiscal consolidation has tremendously increased. A FTT would provide governments with substantial revenues. Third, the dampening effects of a FTT on the real economy would be much smaller as compared to other tax measures like increasing the VAT. The paper summarizes at first the six main arguments in favour and against a FTT.