Copenhagen Economics has conducted a study for the German Ministry of Finance on the revenue potential and GDP effects for Germany of a Financial Transaction Tax (FTT) implemented in co-operation with 10 other EU countries.
The main conclusions of the study are:
- The revenue could fall within a range of €17.6 billion and €28.2 billion. Broadly, this would represent 1.5 to 2.5 percent of the total German tax revenue; a non-trivial contribution.
- Effect on the real economy is estimated to be a loss of around €0.6 – €2.4 billion.
- However, the truth is that the impact from dynamics is very difficult to predict, calling for very cautious estimates. One of the key challenges is “leakage”: the FTT leads market participants to reorganise their trade to avoid (legally) or evade (illegally) the tax. Reducing the extent of leakage will effectively require extensive collaboration with financial centers outside the FTT zone such as London, New York and Hong Kong.
For further information, please contact Partner Sigurd Næss-Schmidt