Financial transaction tax worries Europeans
At the same time as Australian financial planners resist elements of the Government’s Future of Financial Advice package, financial services companies in Europe are opposing the imposition of a tax on financial transactions to fund European debt.
The level of resistance to the so-called ‘Tobin tax’ has been clear by the EDHEC-Risk Institute, which has warned that the tax will result in a reduction in the trading of securities.
“The Tobin tax reduces speculative activity in financial markets, but this tax also drives away investors who provide liquidity, stabilise prices, and help in the price discovery process,” it said.
The EDHEC-Risk Institute analysis also warned that imposing a tax on financial transactions would present its own challenges, not least of which being the ability of regulators to distinguish between transactions related to fundamental business and those that a purely speculative.
“From the point of view of speculators, unless every country in the world introduced the Tobin tax, it would be easy to circumvent the tax by routing transactions through countries that do not impose the tax,” it said.
AUTHOR
Mike Taylor
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
