http://www.counterpunch.org/2011/11/04/the-specious-case-against-a-financial-transactions-tax/With the European Commission seriously considering a tax on financial transactions (sometimes referred to as a “speculation tax”), the opponents of such a tax are shifting their campaign into high gear. We are hearing predictions of disaster from the financial industry and friendly economists if the European Union goes this route.
The opponents’ claims go along three lines:
1. The tax will not be enforceable;
2. The tax will just be passed on to consumers and therefore will not be taking money from the intended targets in the financial industry;
3. It will raise the cost of capital and therefore slow growth.
Each of these objections are either altogether wrong or hugely exaggerated.
The claim that financial transactions taxes are not enforceable is disproven by the fact that many countries — including China, Hong Kong and the United Kingdom — have financial transactions taxes in place and raise substantial revenue through the tax. In the UK, the tax raises an amount that is between 0.2 and 0.3 percent of GDP each year ($30-$40 billion in the United States). This is done by just taxing stock trades. It does not tax bonds, options, futures or the other derivative instruments that would be subject to the tax being considered by the EC.
Furthermore, the HM Revenue and Customs in the UK reports that the stock transfer tax has the lowest administrative cost of any of the taxes it administers. One factor helping compliance is that a party does not have legal ownership of shares of stock unless they can show that they have paid the tax. This sort of creativity can substantially reduce enforcement problems.
More at the link --