Trade Transaction Tax - The Death Of All Us!

http://www.imf.org/external/np/exr/c...2009/index.htm

"We expect to make comments available on the IMF website after January 1 in order to stimulate debate on the issue."

"We request that comments be submitted by February 1, 2010, to allow their consideration for the study."
They need comments submitted in order to post them up. You can send in your view now.

Where is Milton Friedman when you need him?

So, I'm in Australia and go to Europe for a holiday. I land in Greece and have $100,000 sent to me. I'm left with $98,000. I move on to Italy, not spending anything, have the cash sent to me and am left with $96,040. Onward to Spain with $94,119, Portugal with $92,237, France with $90,392, England with $88,584 and so on to 12 more countries where I end up in rather expensive Scandinavia with $69,513. Utterly ridiculous, patently criminal and grossly unworkable. This will just grind economy to a halt, but maybe that's what the Marxists politicians want, to reduce us to our knees as they did with eastern Europe and other places where communism reigns supreme.

The original $100,000 has been taxed to the hilt anyway and really should be $133,000 or even more!

To hendrix the Slovenian, post #5, that's what I'd expect from a communist country, in fact taxation was developed by the communists, was it not?

This tax discourages day trading which will end the "trader status".

How are you gonna prove to IRS that you deserve that status when you can't make a profitable trade during the day and have to hold it overnight.

5 trades a day keeps auditors away.

You are not banned. They just stop accepting your deals.

Don't let the thread get sidetracked by irrelevant issues. The important thing is for as many people as possible to provide intelligent, persuasive comment on the IMF website asap and to forward the link (and details of the issue) to every forum out there whose participants' livelihoods would be jeopardised by the introduction of this tax.

Its background is twofold: Sarkozy is in favour of anything that will screw Anglocentric global finance, and Brown is returning to Old Labour class warfare and hard socialist populism. Both of them are reckless and negligent enough to continue chipping away at other economic illiterates like Pelosi; it is imperative that the IMF Report nips it in the bud. The Report will determine whether this issue gains momentum and is introduced in some way, or whether it is put to bed and insurance levies on major institutions preferred. It's not a time to be complacent.

There are a few headline points to make on the IMF website against the Tobin, or Financial Transaction Tax (FTT). 1. it will destroy liquidity; 2. this will be detrimental to the cost of and availability of capital to commercial businesses; 3. systemic risk, eg possibility of interfering with governments' ability to sell their debt; 3. studies have repeatedly shown that FTTs increase volatility, they DON'T reduce it; 4. marketmakers and other market specialists (retail speculators) operate on tiny margins; these liquidity providers would be wiped out overnight by an FTT and millions of businesses, jobs (often low paid support sector) and billions in overall tax receipts from this industry would vanish instantly; 5. effective price discovery would be disrupted by taxing the flow of capital; 6. markets and participants who neither caused the crash nor received public assistance would be devestated by this tax; it is possible to be far more precise in targeting punitive or cooling-down levies and the other appropriate responses to the credit bailout; 7. taxation funding for climate change is only justifiable and effective where confined to industries whose behaviour contributes to climate change and which would be influenced by such levies, eg aviation, shipping and other polluters; 8. the FTT is the new Smoot-Hawley Act - at a time when political leaders should be doing everything to boost the attractiveness of markets, it is madness to impose legislation and taxes which threaten to stifle any recovery and deepen any depression by deterring the free flow of capital; 9. the destruction of liquidity caused by an FTT makes the projections of any revenue raised wildly unrealistic.

There are other arguments; but let's get some of these plastered over the IMF website as soon as possible by as many people as possible in order for this financially illiterate suggestion to be stillborn when the IMF reports.

Already, the IMF has received a letter from people representing scores of economists, NGOs and other cretins who are strongly exhorting the IMF's approval of such a tax. Public opinion is way against anyone even tangentially involved in the financial industries, the legitimate role of short-term speculation is totally obscured from public view, and the red buttom issues of credit crunch and climate change are going to provide for an awful lot of bad laws and taxes in the times ahead. Sarkozy is serious about this tax - he is pitching it at 5 pips for every trade, I think; low enough for the proposal to be taken seriously.

FF people - you have four weeks to post comment on the IMF's website. By April they will rubber-stamp the Tobin Tax as a proposal set for eventual implementation once Geithner has been worn down, or they will pour lukewarm water over it and put it to bed again in favour of some kind of levy on the major banks.

So: 1. for God's sake, post up views, and 2. post this info on all other traders' websites you can think of, and encourage those people to submit representations to the IMF website too.

They won't get away with it. Sarkozy already has had a kick in the guts with his emissions trading tax scam. They threw it out. Next to go will be he. Brown is on the way out too.

All that will happen is some places such as Cyprus, Bahamas etc. will choose not to implement this tax all the cash will flow through there. If you say they have no clout then some places like China, Russia or India may not implement it, all the cash flows there and the west can't do much about it.

OTOH, if you believe in the New World Order, then they will all implement it and destroy the global economies of the world by reducing cash flow and liquidity making the markets a volatile mess thus paving the way for the Anti-Christ.

What they should do, is force the banks to insure themselves against such happenings i.e. pay some kind of premiums to a national or regional, not global, insurance company in the event of them going belly up.

China, Russia and Switzerland have already stated that they will not implement any transaction tax.

It wont happen globally but will probably in USA and UK.

Excellent news. We can certainly trust our money with Switzerland and if we don't trust it with Russia and China, I'm sure they have some more reliable economies on their sphere of influence. Cyprus comes to mind in Russia's case. I'd consider Cyprus trustworthy if trustworthy is the word to use.

So already we can see that this tax will just make capital flee from those that impose it and that is not a good business model.

They should just stop talking about it as it isn't going to happen. They tax us enough as it is. The money we trade with and provide liquidity or insurance to the financial institutions is already taxed and our profits are then taxed afterwards.

Taxation is communism in its purest sense, certainly not market friendly.

Just because something is a bad idea doesn't mean (a) politicians are not stupid enough not to advocate it; and (b) functionaries are not submissive enough not to implement it. At the moment, the key leaders of the EU are all firmly behind it. The first line of defence is Tim Geithner. If/when he gets swatted aside, who really thinks Obama's instincts are not in sympathy with the communistic economically illiterate Eurotrash? Pelosi will be behind it in a trice if she feels she can get away with it.

It all comes down to the IMF report, on which we all may make representations until the start of February. If they swat it down, then Tobin will be back in his box for the foreseeable future and the corrupt thieves who lead us will concentrates all their energies on a big bank levy. If the IMF Report is insufficiently unequivocal then the EU players are going to keep pushing it, the Dem-commie US sector will do so too, and eventually there will be some kind of proposal that will go hand-in-hand with some kind of half-assed attempt at dealing with non-FTT jurisdictions, which will begin to crystallise into a dreadful, bad reality with alarming speed.

Do not confuse the fact that a policy is a bad, even unimplementable, idea with the will of politicians nevertheless to shove it through if it suits their short-term vanities. Remember, within a year or two China is going to be even more aggressively pushing the idea of one globalised currency (initially the IMF SDR basket) which will be the only way to sanitize their USD reserves without its value crashing. At that point, it is going to be much more easy to start envisaging a fully comprehensive FTT. Minor jurisdictions which don't implement it will be blacklisted like tax havens. Don't rely on the UK Tories who may replace Gordon Brown this spring - they are clueless, equivocal on tax and have only weakly come out against a Tobin Tax on the juridictional point.

Four weeks to go to abort this thing at the IMF stage, beyond which its momentum will only grow. So submit your take, or straight C&P of the arguments above, to the IMF's email address also listed on this thread. It's not just about whether the tax is jurisdictionally viable, it's about price discovery, it's about liquidity, it's about the increased volatility that such taxes cause, about cheap and free access to capital, it's about destroying millions of businesses and livelihoods and about the moral hazard of introducing Smoot-Hawley 2.0, it's about the fact that the tax would fall indiscriminately on sectors that neither caused the crunch nor received a bailout; and about the fact that punishing, holding to account or cooling-off sectors which pose a risk to the global economy and to the environment should be far more intelligently and precisely targeted, on the big banks and the specific products that caused the crisis, and on the industries that actually pollute, whose conduct would be altered by such a tax.

(not that I am a big believer in the climate change politicking, but hey, you can only tackle one delusion at a time)

Some comments from elitetrader.com

Vote NO.

http://www.govit.com/vote/citizen-v...ill=2009-s-2927

My comment on Govit.com follows the reasoning in my last post about focusing on capital and leverage to fix the problem. Same as with my IMF comment too. Problems need to be fixed at the source, not with a market-upsetting shotgun transaction tax.

Govit Comment (part cut off for size limit)

I have covered this tax topic in-depth on my blog, magazine articles and petitions to US Congress at www.greentradertax.com. This tax will seriously damage markets, economies and jobs. A better solution is to require higher levels of bank capital, regulation and constraints on leverage and trading within deposit and lending institutions. If you must raise funds for future potential bailouts, a more narrow-approach bank levy is better than a shotgun financial transaction tax. However, even a bank levy invites moral hazard with banks, so again, more capital and regulation is the answer. If the US passes this tax and other countries do not, the US will outsource its financial services leading market position to foreign countries. Switzerland, Hong Kong and other market centers will not enact this tax so it will competitively hurt the US and UK the most. The IMF is concerned with both of these countries improving their financial condition and this tax will hurt it. The IMF's initial reports and Secretary Geithner are correct on the levy being preferable over a tax. Only desperate political and non-profit elements hungry to win votes (UK Labour) and funds for social causes and a new global tax sovereignty regime (for climate control etc) are in favor of this tax. None of their reasons justify this economic destruction. Speculators make markets and markets are as important as products. Stifling or killing off speculation will raise prices for users like investors and farmers. It's government interference like price controls. Some desperate countries facing EU budget infractions may be interested in this market control but that is against IMF policies. There is no valid justification for this tax. The IMF report due in early 2010 is expected to put this financial firestorm out worldwide and in the US, UK and finally EU. Senator Harkin (D-Iowa) should listen to his own state farmers who oppose this tax. Wider spreads on prices can disrupt farm production.




One on One with Duncan Niederauer, CEO, NASDAQ Euronext

http://www.pbs.org/nbr/site/onair/g...uronext_100104/

GHARIB: Let's talk a little bit about financial regulatory reform. The American public is looking to Congress to pass new rules that hopefully will prevent the financial system from breaking down in the future. What do you like the most? What don't you like?

NIEDERAUER: I think a lot of what you are going to see from the SEC is directionally correct. It is going to be a lot around market structure. I don't know if it is necessarily going to be in the category of preventing a crisis. I think the best thing that has been talked about is on the OTC derivative space, more central clearing, more transparency. The thing I'm most worried about on the regulatory side is this talk of a transaction tax which I think would have very, very negative implications for volumes and for the cost of trading for retail investors.

GHARIB: And this transaction tax would be on trades of stocks and options and futures. Is that a tax really just going to be passed on to investors?

NIEDERAUER: That's my view. I'm actually writing a piece right now that I'm going to be distributing in the next couple of weeks. And among the points I make is one of the points you just made Susie, which is it's absolutely a pass-through tax. This idea, the way it's been packaged, to sell it to Main Street that it is a tax on Wall Street. It is not a tax on Wall Street. It is a tax on Main Street. It will flow down to the retail investor. It will flow down to the mutual fund holder. It is not going to be paid for by Wall Street.

The Laffer Curve -- I get it. Nice play on statistics.

I hope that enough people wrote to the IMF on the sheer stupidity of such a tax, not only because it does the opposite of what it's intended to do, but also because it seems ridiculous that an industry such as this should be penalised when it was not the cause of the current mess.

Just because there are large amounts of capital being used in this market, that doesn't mean that taxation is necessary or productive. It seems to me that I pay tax on profits I make anyway, so why tax the actual transactions themselves, which would then result in me not trading and not paying tax. If NGOs and simlar institutions want to find an income to deal with global issues then they should find some other source. Sure some people will say that's what they would expect to hear from a trader, but it seems beyond belief that just because large amounts of money flow on the currency markets, that that money should be earmarked for their purposes. If we need taxes for such a fund they should come from societies as a whole and not certain individuals or groups of individuals within them.

Moreover it should be up to government discretion on whether they wish to forfeit some of their own tax receipts for the perceived greater good of issues caused by these global negative externalities. If they wish to do so then perhaps cutting down on a nuclear submarine here or there might provide them with the cash. This is an International issue that requires taxation of all of the developed world's citizens. But then this is part of the problem, the only solution that most economists can come up with to counter the excesses of capitalism are more taxes, which inevitably hit the people that cannot afford to pay them. The result is that those that are too large to fail get off scott free and everyone else is forced without option to the point where life really does just become a constant 9-5 grind, working for the man.

If some people wish to take their hard earned money and risk it in speculative trading which adds liquidity to the market, then leave them be. I'm not doing any harm to anyone and I value still being able to have the freedom to make my own way in this life. New Labour has literally destroyed UK society with it's policies and they have no qualms about exporting that destruction to as much of the external world as possible. And I'm not even talking about the economy. The incompetence is staggering.

So now with the recent European mess, politicians are blaming again the "bad boys in the marketplace", the root of all evils....just to convince the public, that it´s not their (the politicians), fault.
They don´t want anybody to realize, that the markets are beating the Euro and all it´s markets, cause basically the fundamentals stink...and the markets are smart enough not to pledge their money into a hopeless debt crisis .
The bad news: in Germany, who will have the heaviest burden on the salvation package, there are powerfull party voices screaming fot the transaction tax...and everybodýs listening, and worse, believing that it´s going to solve all the problems...
After that, the Government can continue playing puppets: for the energy/oil/ atom lobbies, for the bureacracy lobbies,weapons lobbies...satisfying their greed, and taking ever more credit to pay for it....blame it on the market...

I'm moving to China.

http://www.facebook.com/pages/No-Rob...54214324598809

Very funny articles taking the piss out of the looney robin hood tax mob.

Be carefull guys..... its a crazy idea, but never underestimate the stupidity of the public when they are in populist revenge mode.

Robin hood tax = no more retail forex ..... do something

so , the tax will be instituted in europe where i live. the tax will be 0.05%. is it going to have such a damaging effect on trading forex?

Not if you are trading off weekly bars

depends really. I think if you have your account outside europe, you won't fall under that tax.
Other than that, it seems so tiny, that you shouldn't have a big problem. It's just another thing you need to factor in in your trading costs.