Few facts about financial transactions

In economic terms, an economic transaction is the mutual transfer of rights of disposal of goods or claims between different economic entities. The sum of all economic transactions in which economic objects pass from one economic entity to another in return or without consideration is referred to as the economic cycle.

On a normal trading day, more than $ 13,000 billion in global financial transactions are made. Only a small part of this is used to finance real-estate business such as services and merchandise. The majority of the transactions are attributable to pure trading transactions. For example, if the exchange rate of a currency differs by a fraction of a second even in the per thousand range on important stock exchanges in the world, currency traders contribute to a price adjustment through fast transactions of large volumes. At the same time, the liquidity increases and thus improves pricing. Consequence: The volume of foreign exchange transactions is almost 70 times greater than the volume of total world trade in goods and services.

Overall, the international financial market has benefited the most from globalization. Since there has been a global financial and economic crisis in 2007, is in government circles again intensified debate over whether and how international financial actors to be involved in entering the globalization of markets associated risk prevention and the costs of crises. One instrument would be the taxation of financial transactions as a regulatory instrument or source of revenue, so that the financial sector can also participate in the risk costs of crises.

Especially small investors would be particularly affected by the Tobin tax, as far as their financial business would only yield a relatively low return. Undoubtedly, this is often the case in the current period of low interest rates. Retail investors are currently already suffering losses, because their capital yield was reduced by the introduction of the final withholding tax from 2009 by 25 percent and the allowances were limited. For comparable reasons, the stock exchange turnover tax was abolished in 1991, which wants to reintroduce the SPD according to their election program of 2009. A Tobin tax on all transactions would also hit the wrong people.

A difficulty in the implementation results from the cross-border nature of financial transactions. There would have to be international agreement on the introduction of a Tobin tax, otherwise a country renouncing such a tax would undermine the effect of the Tobin tax. The undeniably legitimate concern to prevent speculation should, instead of a Tobin tax, be better achieved through comprehensive regulation of hedge funds, the inclusion of unregulated financial hubs (tax havens) and higher risk underwriting by the relevant financial market players. The G20’s comprehensive package of measures to reform the international financial markets points in the right direction

The Commission’s original proposal was for states to tax trading in equities and bonds at a minimum of 0.1% of the selling price and that on derivatives with at least 0.01% of the face value of the derivatives agreement. The tax should be due as soon as one of the parties involved is established in the EU. Brussels argued that the financial sector should contribute to fiscal consolidation after the financial crisis, that risky trading should be curbed and that an EU-wide solution to the single market was better than a patchwork of national approaches. With the now planned procedure in a smaller circle and the seclusion of financial centers such as London and Luxembourg, the question becomes even more important how and how far the exodus of transactions can be prevented.