CPB: "Financial transaction tax not efficient"

article date: Dec 21st 2011
AMSTERDAM: A tax on financial transactions as proposed by the European Commission is not contributing to a more stable financial system and is less efficient than other taxes on the financial sector the CPB is suggesting in a finding. The transaction tax would be susceptible for evasion and could lead to new more complex forms of finance the planning bureau assumes.


A VAT on financial services, a bank tax or a tax on financial activity would be more efficient the CPB says in a finding that was made by request of the cabinet.

The tax on financial transactions was originally intended to counter speculation with flash capital. The tax puts a fee of 0,1% on stock transactions and 0,01% on transactions of derivates.

The European Commission gave in September of this year its OK to this tax which would according to EC numbers deliver more than 55 bn Euro per annum. 
That amount is according to CPB realistic , "but it could also be half of it or double" 

The proposal of a transaction tax is supported by the EC, France and Germany whereas the Netherlands and the UK are skeptical.

The transaction tax will not contribute to a more stable sector because this kind of tax doesn't tackle the excessive risks in the financial sector. The transaction tax makes "high frequency trading" (HFT) unattractive for financial institutions in the EU. This automated trade uses algorithms to react to price movements but can according to politicians destabilize the financial system.

The CPB points also to unwanted side effects of the transaction tax such as higher cost for the companies , costs for insurance companies and for pension funds which would have to pay more to cover their valuta-  and interest risk.

dutch source:
CPB: Financiele transactietaks niet efficient'