I spoke about this before but it has come back as a subject: taxing banking trading, I think, transactions. Now it is an official from the Romanian Ministry of Finance.
This is wrong in so many levels I am sorry that I have to point the obvious. Again.
As you know I am not a big fan of the current banking sector structure, in Romania and overseas, but I still do not support a tax on financial transactions.
Here are few reasons why this will not work.
First and most obvious, if you are concerned about government revenues then stop paying for unprofitable banks to stay alive. You, any government doing this, will save much more money that you would ever gain from taxing financial transactions.
Second, as banks are enjoying now an oligopoly any tax cost will be transferred to consumers. The most disturbing result from all this will be that those companies using financial instruments to lower risk in their balance sheet might have to live with the market volatility. In the long run I will not be surprised if this tax will show up in higher inflation through higher costs in the economy from the extra volatility.
Third, it will be a matter of time until banks will learn how to avoid the tax. The profit from financial transactions is too important to their bottom line to leave matters like this.
Finally, the banking sector is already in trouble and under-capitalized. It does not need another tax to push it over the edge. It is capable of doing that on its own. There is always more Greek, Spanish, Portuguese, Italian etc. debt to be financed.