One thing I don’t understand in this transaction tax craze is why do you want everybody to pay for Banks bailout? Why not just taxing the profits of the banks or create an insurance they fund? That’s what the IMF is trying to do. What is the problem with this insurance fund?

It is : – Easy to implement. Just find the institutions that creates a systemic risk or can manipulate the markets and tell them to pay for it.
- Fair. I am a small investor and did not cause the financial crisis, nor do farmers, hedgers, producers… We don’t have to pay for them. Please don’t tell me about 100 K yearly limit, it’s a joke for everyone.
- Hard to avoid for banks. They can’t trade abroad to avoid paying.
- It doesn’t harm liquidity. If you tax equities 0.25 %, bid/ask spreads become 0.25% wider overnight, it’s that simple. Market makers need to be profitable to insure liquidity. We would pay the tax 2 times, one time directly and 1 time indirectly by lack of liquidity.

By the way, don’t use UK as a great example of functionning FTT market.First, market makers and financial institutions are exempted to maintain an orderly liquid market. Only “Main Street” pays it.It would be a weird “punishment” for them to get exemptions after the crisis( for MMs, a licence to print money because of no concurrence ). Second, any investor with half a brain use CFDs to avoid paying the tax.

In the end, people prefer to pay taxes for something they didn’t cause.It’s a bit rude to post this on a pro-tax blog, but is there just one advantage of implementing a transaction tax over an insurance fund on banks? No. It’s just more populist. Give me a break.

Anthony