Financial Transaction Taxes - Dissertation Example

Download file to see previous pages Research report by Ernst & Young LLP (Tax Policy Services, April 2012. Financial Transaction Tax, Which way now? London, United Kingdom)

• Useful for understanding the current situation of the holistic structure of financial taxes in the EU. http://www.gib.gov.tr (2012)

• This website was searched throughout to gain a deeper understanding of the Turkish Tax System

II - INTRODUCTION
A financial transaction tax (FTT) is a tax placed on a specific type of financial transaction for a specific purpose. This term is most commonly associated with the financial sector. (HM Revenue & Customs, 2001)By any name, financial transaction tax is a fee paid at any time an individual or a company buys or sells a share of stock, any type of security, a futures contract, an options contract, or any of the commonly traded financial instruments. In recent times, the term FTT has been used to refer to the proposed bill “Let Financial Market Pay for the Restoration of Real Market Bill”.

According to the latest crisis and fluctuations in exchange markets, commodity markets, and capital markets all over the world, profit hunger in financial markets and unlimited consumption behavior of individuals are shown as the reasons which caused an economic crisis anywhere in any market. Financial transaction tax has been accepted as a “hero” for saving countries' markets and limiting individuals’ transactions from these markets. In this project, types of FTT researched will give information about implemented and proposed FTTs including country samples and political support with evaluation.

III - HISTORY OF Financial Transaction Taxes
As it is known from the history of economics, financial implementations and investigations are always started in countries that see their future earlier than their economy goes into the crash. In 1694, an early implementation of a financial transaction tax in the form of stamp duty at the London Stock Exchange. The tax was payable by the buyer of shares for the official stamp on the legal document needed to formalize the purchase. As of 2011, it is the oldest tax still in existence in Great Britain (Kincaid, 2009).

In 1936, in the wake of the Great Depression, John Maynard Keynes advocated the wider use of financial transaction taxes (Wishart, 2012). Essentially, the first tax proposal for the financial sector was put forward by Keynes. He assimilated markets that are dominated by speculation into ‘casinos’. He asserted that long-term stability could be provided by taxation on security transactions. Keynes indicated that taxation on security transactions would decrease speculation and provide effective distribution of resources in the market with the ‘right’ price level. In 1972, the Bretton Woods system for stabilizing currencies effectively came to an end.

In that context, James Tobin, influenced by the work of Keynes, suggested his more specific currency transaction tax for stabilizing currencies on a larger global scale (Tobin, 1993) ...Download file to see next pages Read More