The recent debate concerning the EU Commissions plans to tax financial transactions has led to many and at times rather imaginative calculations of, what such a tax would mean tor everything from employment to retired persons budgets.
It is the really the heavy artillery of the lobbyists that has been called forward, when you start to claim that a minimal tax on trade with paper assets should erase 5000 Danish jobs and reduce all Danes pension flatly with 700 DKK [160 USD] every month!
You can agree or disagree politically with the commission’s proposal to tax financial transactions, and over, whether it from society’s viewpoint is reasonable that a sector with a relatively large return also contributes to the commonwealth.
But there should be no disagreement on the basic facts.
But will a tax not have enormous costs then, and will the banks not just move transactions out of Europe? No. The Commission expects, that the cost would be less than 0.01 percent of GDP annually – i.e. lightyears from the monthly 700 DKK for pensioners.
Add to this that we haven’t even taken into account what the revenue from such a tax could be used for.
Clearly, if f.i. you use a part of such a transaction tax to pay Denmarks contribution to EU – Well then you other funds on the state’s budget to f.i. welfare, as other parts of the revenue could be used to invest in research and similar growth measure or tax reduction in other areas.
As to the outflow of jobs in the financial sector: The tax is attached to the member country where the bank resides. Taxing will also take place – regardless if the bank has opened an office on the Cayman Islands, where they deal from.
That will naturally reduce the motive to move jobs away.
Furthermore experience from among others Singapore, Switzerland and Japan, show the practicality of taxing financial transactions without massive outsourcing.