the UK stamp duty tax 0.5% does not apply to qualifying intermediaries such as market makers at large banks...it is charged to the small investor/trader/hedger/saver/farmer, i.e. main street. If they didn't exclude market makers the UK experience would mirror that of Sweden's from 1994-2001 and volumes would drop 95%-100%, business would move offshore. Articles such as these omit these key details because they want to hoodwink you into thinking it is a tax on bankers, not main street...if they didn't make exceptions for bankers then the revenues that they claim would be generated are misleading because they assume that even with a FTT volumes would be unchanged from current levels (and for many that is actually the main point of the tax..to shrink the financial sector).
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
the UK stamp duty tax 0.5% does not apply to qualifying intermediaries such as market makers at large banks...it is charged to the small investor/trader/hedger/saver/farmer, i.e. main street. If they didn't exclude market makers the UK experience would mirror that of Sweden's from 1994-2001 and volumes would drop 95%-100%, business would move offshore. Articles such as these omit these key details because they want to hoodwink you into thinking it is a tax on bankers, not main street...if they didn't make exceptions for bankers then the revenues that they claim would be generated are misleading because they assume that even with a FTT volumes would be unchanged from current levels (and for many that is actually the main point of the tax..to shrink the financial sector).
Not sure what Brown is smoking today at his press conference
http://www.independent.co.uk/news/b...n-banks-has-support-claims-brown-1878928.html
http://www.independent.co.uk/news/b...n-banks-has-support-claims-brown-1878928.html
Gordon Brown is about as delusional with this transaction tax as Obama is with health care. Brown's press conference clearly shows the desperation of a Prime Minister that will be unemployed very soon.
I love how he thinks everyone but the U.S. is on board, and that the U.S. can be persuaded into a global Tobin Tax. Yeah? Perhaps Brown should check with Russia and Canada, who remain opposed as well.
Then Brown backs up a bit, saying you will probably see further moves to get an international agreement about "some" international levy. Some = the insurance levy on banks, not a tobin tax proposed by the psychotic screwball Brown. Of course, Brown will spin this any way he can, especially when he's down 12% in the latest polls, and is now certain to lose his re-election.
you have the picture exactly.
with the volume on the London Stock I could determine based upon the revenue figure in the article what % of the trading is exempt from the stamp tax and what & is paying the stamp tax.
if somebody would supply this number we could make this calculation and then extrapolate it to trading in the US. then it would be easy to prove that the numbers provided by certain members of congress are pie in the sky and would destroy the careers of public traders for very little revenue gain.
if you could supply links to the swedish experience it would prove to be most interesting.
Brown was desperate to get world leaders to agree to a Save the World agreement at Copenhagen with himself as the great savior. He committed the UK to more cash than Germany or France while he is now seriously suggesting the RAF buy propeller planes instead of jets to defend the UK with in order to save funds.
He is desperate to get an international FTT agreement because as it stands, he will leave office with nothing on his CV but multiple abysmal failures and I suspect other leaders see through his megalomania.
He will go into the history books and he knows it, without one commendation and only outstanding failures to his name.
I can't figure if he is referring to alternative platforms/ecns like Chi-X, Turquoise, BATS Europe et al or more more dark venues. I don't know how their trades are reported and what would be the problem in taxing those ecn trades. One thing is sure, it would "put sands in the wheel of" the Tobin tax...LOL
It's like on futures market, what is the point of taxing exchange commodity trading, when majority of the volume in energy, ags, metals is going in OTC derivatives, swaps, exotics...It's like taxing the top of the iceberg( retail ) while letting big volume untouched. It's even a lot harder to tax than ECNs , how do you tax a phone call or a transaction that is not standardized?
I read somewhere that 70% of transactions were exempt from the stamp duty, it was paid on 30% (sorry, can't remember source)
http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/BP/bp419-e.htm
Sweden: In January 1984, Sweden introduced a 50-basis-point tax on the purchase or sale of an equity security. Thus a round trip (purchase and sale) transaction resulted in a 100-basis-point tax. The tax applied to all trades in Sweden using local brokerage services and to stock options. It did not apply to gifts or bequests. In July 1986 the rate was doubled. The next year, a tax at half the normal rate was also applied against trades between dealers. In January 1989, a tax on fixed-income securities was introduced.
The tax on fixed-income securities was considerably less than on equities, as low as 0.2 basis points for a security with a maturity of 90 days or less. On a bond with a maturity of five years or more, the tax was three basis points.
On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely.
There were several reasons for this change in policy. In the first place, the political climate in Sweden had shifted. The taxes were initially supported because financial transactions were viewed as destabilizing to the economy and as promoting excessive wage differentials. This latter point was distasteful in a society that places so much importance on income equality. The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kroner per year. They did not amount to more than 80 million Swedish kroner in any year and the average was closer to 50 million.(5)
As taxable trading volumes fell, so did revenues from capital gains taxes, almost entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kroner by 1988.(6) (This point is lost entirely in data such as those in Table 1 on page 2, where only direct tax revenues are included.) Another reason for the reduction in capital gains taxes was the decline in share prices associated with the initial announcement of the tax and its increase. On the day that the tax was announced, share prices fell by 2.2%. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement. When the tax was doubled, prices again fell by another 1%. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.
The Swedish system of taxes also played a very profound role in causing trades to migrate to non-taxed or lower-taxed jurisdictions. With the 1986 announcement that the equity tax would double, 60% of the trading volume of the 11 most actively traded Swedish share classes, accounting for one-half of all Swedish equity trading, moved to London; thus 30% of all Swedish equity trading moved offshore. By 1990, more than 50% of all Swedish trading had moved to London.(7) Foreign investors reacted to the tax by moving their trading offshore while domestic investors reacted by reducing the number of their equity trades.
Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only three basis points. The volume of futures trading fell by 98% and the options trading market disappeared. Trading in money market securities, which faced a tax as low as 0.2 basis points, fell by 20%. This reaction was due in large part to the existence of a wide variety of non-taxed substitutes. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s.
The Swedish results cited above are all consistent with those that economic theory would predict. Events and factors other than the FTT could, however, cause similar results, making it difficult to establish cause-and-effect relationships. The timing and magnitude of the financial market effects lead one to look for dramatic changes in explanatory variables. No such changes were evident in economic or financial variables; however, they were evident in changing institutional (i.e., FTT) variables.
Estimated at around 70% exempt in 2005.
http://www.elitetrader.com/vb/showthread.php?s=&postid=2705778#post2705778
Please leave comments after the article since the Independent is a UK left wing paper. You need to sign up for an 'Independent Minds' member account but it takes two minutes to do and comes in handy because the Independent regurgitates this debate every week or so.
As you can see, I have posted my standard info about the 'Swedish experience'...
