Tax on financial transactions on European Union proposed yesterday | Forex Factory

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Tax on financial transactions on European Union proposed yesterday

  • #1
  • First Post: Jun 21, 2011 1:07pm Jun 21, 2011 1:07pm
Didn't know where to post this, hope it's ok here...

http://www.eubusiness.com/news-eu/fi...conomy-tax.arg

How should europeans worry about this? Could it kill intra-day trading for the small investor?
  • #2
  • Jun 21, 2011 2:22pm Jun 21, 2011 2:22pm
Don't worry, that's just their "Tobin Tax" with 0.05 % or 0.1 %.

Won't kill anything, maybe a cat for the barbecue ....
  • #3
  • Jun 21, 2011 4:48pm Jun 21, 2011 4:48pm
But Tobin tax was never implemented was it? And a 0.05% or 0.1% tax would effectively kill day-trading.
  • #4
  • Jun 22, 2011 4:35am Jun 22, 2011 4:35am
Nope, it was never implemented - there's just a couple of countries that implemented national stamp duties. And yes, it would kill daytrading. Imagine spreads rising from 1 pip to 11 pips. Trading actively would then drain your account pretty quickly.

Europeans shouldn't worry about it. In aggregate, we're better off spending resources on activities that actually add value to the economy. For the individual trader it may mean that he needs to start looking for another job though.

I don't see a real advantage of the tax applied on a regional scale, and therefore oppose to the proposal. I suggest we wait for the IMF to construct a solid proposal for a global tax.
The nail that sticks out gets hammered back in
  • #5
  • Jun 22, 2011 4:39am Jun 22, 2011 4:39am
Quoting Noloqy
And yes, it would kill daytrading. Imagine spreads rising from 1 pip to 11 pips. Trading actively would then drain your account pretty quickly.
Why would spread go from 1 to 11 pips?
  • #6
  • Jun 22, 2011 4:40am Jun 22, 2011 4:40am
wow... global tax. I hope it never happens.

Looks like I better stay in singapore or hk and use a swiss broker lol.
  • #7
  • Edited 5:53am Jun 22, 2011 5:36am | Edited 5:53am
Quoting Noloqy
Nope, it was never implemented - there's just a couple of countries that implemented national stamp duties. And yes, it would kill daytrading. Imagine spreads rising from 1 pip to 11 pips. Trading actively would then drain your account pretty quickly.

Europeans shouldn't worry about it. In aggregate, we're better off spending resources on activities that actually add value to the economy. For the individual trader it may mean that he needs to start looking for another job though.

I don't see a real advantage of the tax applied on a regional...
But they're working on making a global tax too:

Quote
"With a view in particular to the G20 Summit in Cannes, we will in parallel continue to work for a global agreement on a financial transaction tax," Barroso added.

Yes economically it's a good tax, but then why not go ahead and tax poker, online betting, etc... It takes away your freedom. It's difficult to do work hard learning how to trade and developing your trading method and then the EU trolls come and say it's over and all your work was for nothing.

If this happens, I hope liquidity dries out so fast that european countries can't sell debt and nobody trades stocks, which is what happened in Sweden when they implemented a tax like that. Sweden implemented a 0.003% tax on bonds futures, and the volume fell 98% and the options market disappeared. Owned I oppose to this proposal on a regional and global scale.

If this was on USA it would never happen, Wall Street does a good job controlling politics there

Quote
Why would spread go from 1 to 11 pips?

0.1% of 1.0000 is 0.0011 = 11 pips. If the currency pair was at 2.0000, it would be 22 pips. Now, if it was just a 0.01% tax for example, it wouldn't kill anything, it would just be annoying.
  • #8
  • Jun 22, 2011 8:45am Jun 22, 2011 8:45am
Quoting Jasus

If this happens, I hope liquidity dries out so fast that european countries can't sell debt and nobody trades stocks, which is what happened in Sweden when they implemented a tax like that. Sweden implemented a 0.003% tax on bonds futures, and the volume fell 98% and the options market disappeared. Owned I oppose to this proposal on a regional and global scale.
That's the reason why sweden is against a financial transaction tax. I'm sure that germany, austria, france and some other eu countires will install the tax. They call it Tobin Tax but in reality this tax has nothing to do with Tobin's ideas. All they want is money from the retail traders. The banks prefer a FTS rather than a financial activity tax. The banks are knowing that they can aviod the tax when they transfer their trading activities for example to london (what the most banks in europe already have done).

Installing a FTS in isolation is the dumbest thing a government can do. Some EU countries think they are making a big deal with a FTS what shows that they have no clue about economics and business.
  • #9
  • Last Post: Jun 24, 2011 7:35pm Jun 24, 2011 7:35pm
i guess when this tax will be introduced there won't be much retail traders left cause they can't afford to trade anymore

and the big guys will just move their trading departments offshore

cause of this the tax revenues will not rise by +10 billions like promised but drop -10 billions

and this all happens cause politicans are usually made of lawyers, teachers, officers or journalists without any knowledge of economics
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