Deutsche Börse questions the sense of a financial transaction tax draft published today by the European Commission. The impacts of this potential tax show a striking discrepancy between political objectives derived from the financial crisis. On the one hand, the European Union wants to improve transparency and stability and wants the financial sector to make a contribution to the costs of the crisis. On the other hand, such a very tax will lead to a situation in which financial transactions will migrate to less regulated and non-transparent markets. Potential systemic risks will remain unchanged, but they will merely be detracted from the influence and control of the supervision.
By introducing the tax in only 11 member states of the European Union theses negative impacts will only play out more strongly. Especially because important financial centers like London and Luxembourg will not take part in enhanced cooperation. This will mean a further weakening of the financial center in Germany with massive economic effects to follow.
A tax on financial transactions according to the draft law of the EU Commission would be a gift for the less regulated and less transparent financial markets. Countries introducing such a tax would import those very risks for customers and clients that they were striving to wipe out. Thus, such tax would counter the G-20 efforts to foster the regulated and transparent markets.
Furthermore, those who would pay the tax are those who are commonly are not seen as the originator of the crisis. In fact, the opposite is true; small and medium-sized companies in particular will face higher capital-raising costs as a result of rising transaction costs. Savers and private households would also suffer greater financial losses as the tax would directly hit their retirement provision products.
