Financial transactions tax: IMF at odds with Europe

3 October 2013

The IMF has put itself out of step with Europe on the issue of financial transaction taxes (FTTs). In early September the European Commission rejected an EU legal opinion which questioned the legality of a proposed FTT and said it would go ahead with legislation to allow supportive countries – including Germany, Spain and Italy – to introduce an FTT on stocks, bonds, and securities lending, among others. Carlo Cottarelli, the IMF’s fiscal affairs chief, cast doubt on the tax at a July conference: “A tax on transactions, in general, is not so sensible, it is something old-fashioned”.  However, these comments contrast with an IMF 2010 working paper which highlighted the benefits of securities transactions taxes on secondary trading in equity shares, the most common form of FTT (see Update 72).