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Taxation and Rebellion: A Historical and Philosophical Perspective Read chapter Read first chapter

2017 | OriginalPaper | Chapter

10. Bank Transaction Taxes: International Evidence and Potential Implications for Greece

Authors : Hiona Balfoussia, Dimitris Malliaropulos, Dimitris Papageorgiou, Athanasios Tagkalakis

Published in: Taxation in Crisis

Publisher: Springer International Publishing

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Abstract

This chapter studies a particular case of financial transaction tax, namely, the bank transaction tax—that is, a tax imposed on any payment, withdrawal, or transfer made via the banking system. We review the relevant academic literature on countries which have employed the tax. Moreover, we use Greece as a case study of what the bank transaction tax would imply for a peripheral euro-area economy during the crisis, both in the context of a meta-analysis of existing literature as well as using a micro-founded dynamic stochastic general equilibrium (DSGE) model with a detailed financial sector and an appropriate shock. We conclude that, while the bank transaction tax has some advantages, its imposition also has a number of negative implications.

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Appendix
Available only for authorised users
Footnotes
1
In contrast to Latin American countries, some European countries such as Ireland recently imposed taxes on cash withdrawals, in order to encourage the use of electronic payments in the economy.
 
2
Fenochietto et al. (2012) find clear evidence of a significant negative impact of the bank transaction tax on the level of savings and checking account deposits in Argentina between 1996 and 2010. The tax generates a long-run negative impact on the level of deposits estimated at about 3% for each increase in the net tax rate by 0.1 percentage points.
 
3
As part of this policy debate, the European Commission (2011a, b) in fact proposed an EU-wide financial transaction tax that would cover a broad array of financial assets, though the proposal was eventually abandoned. Hemmelgarn et al. (2016) and (IMF 2010) provide a comprehensive overview of current policies and recent research on financial transaction taxes, including an evaluation of their possible merits and drawbacks.
 
4
This section summarily presents the 3D model of Clerc et al. (2015), following their Sects. 10.3 and 10.4, to facilitate the reader’s understanding.
 
5
Mendicino et al. (2015) have calibrated the model to euro area data.
 
6
It should be noted that any form of banking restrictions, such as the ones in place in Greece at the time, would imply limitations on agents’ ability to substitute away from banking transactions.
 
7
As regards corporate loans, this is compatible with the weights of Basel I and with the treatment of non-rated corporate loans in Basel II and III. The capital requirement parameterization for mortgage loans is compatible with their 50% risk-weight in Basel I.
 
Literature
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Arbeláez, M., Burman, L., & Zuluaga, S. (2005). The Bank Debit Tax in Colombia. In R. M. Bird, J. M. Poterba, & J. Slemrod (Eds.), Fiscal Reform in Colombia. Cambridge, MA: MIT Press.
Baca-Campodonico, J., de Mello, L., Kirilenko, A. (2006). The Rates and Revenue of Bank Transaction Taxes (OECD, Economics Department, Working paper No. 494).
Clerc, L., Derviz, A., Mendicino, C., Moyen, S., Nikolov, K., Stracca, L., et al. (2015). Capital Regulation in a Macroeconomic Model with Three Layers of Default. International Journal of Central Banking, 11, 9–63.
EU Commission. (2011a). Proposal of a Council Directive on a Common System of Financial Transaction Tax.
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Fenochietto, R., Pession, C., & Crivelli, E. (2012). Impact of the Bank Transactions Tax on Deposits in Argentina. CESifo, Venice Summer Institute, Taxation of the Financial Sector.
Hemmelgarn, T., Nicodème, G., Tasnadi, B., & Vermote, P. (2016). Financial Transaction Taxes in the European Union (Taxation Papers 62, Directorate General Taxation and Customs Union, European Commission).
Honohan, P., & Yoder, S. (2010). Financial Transactions Tax: Panacea, Threat or Damp Squib?, The World Bank Research Observer, 25(2). Washington: The World Bank.
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Metadata
Title
Bank Transaction Taxes: International Evidence and Potential Implications for Greece
Authors
Hiona Balfoussia
Dimitris Malliaropulos
Dimitris Papageorgiou
Athanasios Tagkalakis
Copyright Year
2017
Book
Taxation in Crisis

Print ISBN: 978-3-319-65309-9

Electronic ISBN: 978-3-319-65310-5

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-65310-5_10