1/4% Tax on all stock trades pushed in NY Times today

Quote from listedguru:..further discussions around whether the financial transaction tax model offers a stable and efficient mechanism at this stage.." .. thats their kind way of saying no? -Guru
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"George Osborne says
he wants to look at
stamp duty on shares".
Source: BBC News
[http://news.bbc.co.uk/2/hi/uk_news/politics/5289954.stm ]

A uniquely British tradition is the consistent failure to keep their promises to abolish transaction taxes (aka Stamp Duties). For instance:

"In the 1990 Budget the Conservative government of the time announced that stamp duty on shares would be abolished with the introduction of the London Stock Exchange’s new settlements system, Taurus. However, in the end Taurus was abandoned in March 1993 and the abolition was never implemented." [1]

In fact what the Labour goverment did instead, was to extend the scope of the FTT on share trading to the previously exempt pension funds...

... wait two decades and here we go - deja vu all over again:

"Shadow chancellor George Osborne has told the Sunday Telegraph he wants to look at abolishing stamp duty on share trading, to help boost pensions. [..] 'Of all the damaging things Gordon Brown has done to the economy, the single most destructive has been the attack on personal pensions,' Mr Osborne said." [..] Cutting stamp duty would add up to £80bn to share values and boost pension funds, the centre-right think tank the Bow Group will say in a pamphlet next week, according to the Sunday Telegraph. [..] The [Labour] government abolished tax relief on pension fund trading in 1998. [2]

... but the above wasn't exactly a promise to act (only to 'look at'), unlike this Osborne's 2007 promise:

"Former Chancellor Alistair Darling [Labour] scrapped the 1% stamp duty [..] on houses worth less than £250,000 in his last budget, but the move was only intended to last for two years. [..] The Tories had originally pledged ahead of the election to abolish stamp duty on all property transactions below the value of £250,000 indefinitely, but Osborne failed to make mention of the tax in his budget speech today at all."[2] "The only mention came in the Budget document, which said that “the Stamp Duty exemption for first-time buyers on homes up to £250,000 is under review”.[3]

So, yes, Guru, judging from historical evidence, that was indeed their way of saying 'no'. Their ways of saying 'no' apparently have to include phrases such as "look at" and "review" and indeed "further"... Little wonder that 'Yes Minister' is just being repeated on BBC 7...;)
(http://www.bbc.co.uk/programmes/b009v0dc )

________
[1] Bond, Steve, et al., 2005. Stamp Duty on Shares and Its Effect on Share Prices. FinanzArchiv 61(3), 275-299. Previous versions: IFS Working Papers W04/11, Institute for Fiscal Studies, URL: http://ideas.repec.org/p/ifs/ifsewp/04-11.html
[2] "Tory party hints at tax cut plan". BBC News, 27 August 2006, URL: http://news.bbc.co.uk/2/hi/uk_news/politics/5289954.stm
[3] "Budget: Stamp Duty promise broken", Mortgage Introducer, 22 June, 2010, URL: http://www.mortgageintroducer.com/m...n_depth/Budget:_Stamp_Duty_promise_broken.htm
[4] "No mention of stamp duty promise", Financial Times 22 June, 2010, URL: http://www.ft.com/cms/s/2/9f876d5a-7e25-11df-94a8-00144feabdc0.html
 
Quote from ZeroSigma:
So, yes, Guru, judging from historical evidence, that was indeed their way of saying 'no'. Their ways of saying 'no' apparently have to include phrases such as "look at" and "review" and indeed "further"... Little wonder that 'Yes Minister' is just being repeated on BBC 7...;)
(http://www.bbc.co.uk/programmes/b009v0dc )
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When David Cameron was asked about the FTT in the Commons just ahead of the G20 meeting he responded in this characteristically nebulous way. Sir Humphrey would have been proud! :

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100621/debtext/100621-0008.htm

Stella Creasy (Walthamstow) (Lab/Co-op): May I press the Prime Minister to say a little more about his discussions in the European Council on the banking levy, and where that leaves those of us who are desperate for action on global poverty and climate change, particularly the introduction of a so-called Robin Hood tax?


The Prime Minister: I am grateful for that question. There was a long discussion about the issue of a transaction tax, and great support for that within the European Council. I was keen to make sure that countries such as the UK that want to introduce a banking levy, and that would like international agreement but nevertheless want to go ahead in any event, should be able to do so without being bound by the EU to introduce a particular sort of tax or to spend the money in a particular sort of way. That was achieved.

If the hon. Lady looks at the EU Council's conclusions, she will see that they say that we should continue to explore and develop the case for a transaction tax, which is sensible. However, I must tell her that it will be difficult to get international agreement for such a tax, which is why Britain is right to take the approach that it has taken.
 
Belgian EU presidency wants bank tax deal-minister

http://af.reuters.com/article/energyOilNews/idAFLDE66303720100704

MILAN July 4 (Reuters) - Belgium, which took over the European Union's six-month presidency on July 1, wants an EU deal on a bank tax by the end of the year, Finance Minister Didier Reynders said in a newspaper interview on Sunday.

The bloc is considering a levy on banks to insure them against the cost of any future bailout and is also studying a financial transaction tax, even though G20 leaders failed to agree on either plan in June.

"We are pushing for a political agreement by the end of the year," Reynders told Italy's La Stampa newspaper when asked about his plans for a bank tax.

"If we are talking about financial transactions, we believe this ought to concentrate on ultra-rapid movements that don't generate real value such as short-selling," said Reynders, finance minister in the outgoing government. Coalition talks are under way following last month's parliamentary election.

A transaction tax ought not to touch traditional savings such as bank deposits, he said.

In addition, there is a need for caution over imposing new taxes on banks, given the arrival of new requirements under international Basel 3 capital rules.

"We can go and hit banks on their own funds but let's not forget that it is banks that finance the economy. There needs to be a balance," he said.

EU leaders told their finance ministers in May to work out details of the banking levy. The EU's executive has said it will study the financial transaction tax.
[...]
 
http://mobile.thehill.com/on-the-mo...-over-whether-to-pay-for-tax-cuts-part-2.html

Congress is hunting for offsets to pay for extending Bush middle class tax cuts. Minor concern that Rep Larson (D-Conn) quoted in this article - and a sponsor of FTT - may float FTT as an offset. This has not happened. Just thinking how FTT could appear before midterms._

For extending unemployment benefits, dems used repeal of carried interest and the S Corp SE tax loophole as an offset. _They are still trying to extend unemployment and are saving these offsets - tax increases for that. Hasn't gotten through the republican filibuster yet.

Bank taxes and levies should be set aside for wind downs not tax cuts or unemployment. FTT was connected to one of the first jobs bills.

We know the argument if it comes up this way. FTT hurts the middle-class. They can argue it's a direct offset?

Republicans will filibuster any offsets that include tax increases including FTT and they will call for extending bush tax cuts for everyone or no one. Paying for that is impossible, so republicans will try to pin the tax increase - letting bush tax cuts expire for all - on Democrats. If no bill can pass, then no FTT even if included by Dems._

The die is cast. No new taxes unless gettable republicans go along, and brinkmansship before the midterms.

Sent from my iPhone
 
Belgium presidency on bank tax and FTT.

EU will wise up and not overly-tax banks, with higher-capital rules coming, some in G-20 not taxing their banks, and EU meltdown 2.0 well under way. It's eating your own._

They don't want FTT on normal investors but they like the idea of an FTT to only slow HFT and short sellers. Just as presumed. But how can FTT be crafted to make their social-engineering selection? Some on this thread may know how and that could be our achiles heal.

Can a FTT be charged on all transactions, except for the first five per day? Something along those lines? That of course would decimate he trading industry and destroy liquidity.

Sent from my iPhone.
 
Quote from Robert A. Green: Can a FTT be charged on all transactions, except for the first five per day?
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That would create perverse incentives for the very thing social engineers want to curb: gambling. The size per order would increase, directional speculation will be preferred over hedged bets and arbitrage, the use of low-market-impact fragmented orders like VWAP would decline, the use of leveraged ETFs and high-notional-value contracts would increase, and diversification would worsen, with high-priced high-beta stocks 'in play' being preferred over small and stagnant ones, which need investors capital the most. If ETFs survive such a tax (thanks to the likely exemptions for bank market makers), then everyone will become a closet indexer, including mutual funds which will have to fire their army of stock pickers...

And all that on top of the volatility increase caused by reduced market participation (the link between transaction costs and volatility, via liquidity has been already well established, both empirically and through econometric modelling, google e.g.: http://www.google.com/search?q=Tobin+tax+volatility+result+in+site:edu ). Playing devil's advocate is indeed a good idea, let's show them we have nothing to hide! ;)
 
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