Tobin
According to Germany’s Finance Ministry, Berlin and Paris have jointly and successfully appealed to the Eurpean Union’s executive for the preparation of a tax on all financial transactions.
Once this appeal is implemented, there will be a 0.1% tax on all stock and bond trades, and a 0.01% tax on all other monetary transactions such as currency conversions. This is the first step in discouraging short-term speculators and giving Eurpean regulators a way of raising an emergency fund in the billions to help prepare for future financial disasters.
Germany’s Finance Minister Wolfgang Schaeuble and France’s Pierre Moscovici are urging EU nations to agree to “enhanced cooperation” on the proposal and urged their European counterparts to appeal to the European Commission to implement the idea.
The tax has been chosen to be named after Nobel Prize winning economist James Tobin, Tobin taxes are aimed at removing speculation from markets by utilizing this function of microscopic taxation on all monetary transactions. Speculation, which has been the central cause of the increase in stock prices due to expectation pushing the demand curve up (sans ceteris paribus), has been the underlying cause for many of the instabilities of the European market. This idea has been repeatedly rejected by politicians in the past. Most recently when Britain rejected such a proposal last year due to displeasure with what the effects of the tax could be on the City’s financial industry.
At a June meeting of finance ministers 10 nations, among them Italy and Spain, backed the proposal. Britain, which has the continent’s biggest financial industry, opposes the plan.
References:
http://www.cbc.ca/news/business/story/2012/09/28/europe-tobin-tax-transactions.html
http://www.ceedweb.org/iirp/factsheet.htm