Financial transaction tax (FTT)

An FTT is typically a small percentage of the asset's value, taxed when the transaction occurs, either as a fixed fee or as a percentage of the trade value. FTTs can be enacted by both state and federal governments. While several U.S. states have experimented with FTTs in the past, some European countries continue to apply them as a means of generating revenue.

The concept of an FTT has been a topic of discussion in the US. for decades. One prominent example is the Tobin Tax introduced in the 1970s, which proposed a small tax on foreign currency transactions to reduce speculative trading. More recently, national-level FTT proposals have emerged, often driven by concerns over high-frequency trading and its potential destabilizing effect on financial markets. However, these proposals have largely faced opposition and have not been enacted.

In Europe, several countries have implemented or proposed FTTs. For example, France has imposed a 0.3% tax on the purchase of certain stocks, particularly those of large companies listed on the French stock exchange. Italy has also implemented an FTT, applying a 0.2% tax on the purchase of Italian shares, as well as a tax on derivatives. Belgium charges an FTT on stock trades at a rate of 0.35%. Additionally, the European Union has proposed a pan-European FTT, aiming for a tax on transactions across member states, though this proposal has faced challenges in gaining full approval.