An important agreement was signed in mid-2023 aimed at introducing a financial transaction tax. This is also known as the ‘financial transaction tax‘. Professor Bert Scholtens, professor of Sustainable Banking and Finance at the University of Groningen, was one of the seventy signatories of this groundbreaking agreement. We spoke with Professor Scholtens for our magazine ‘Tax Advice’.
The purpose of a Financial Transaction Tax
The purpose of this tax initiative is to tackle global problems. Especially in developing countries where financial resources are often insufficient. Such as the aftermath of the COVID pandemic, the loss of biodiversity and increasingly acute climate change.
Idea is far from new
The idea of a financial transaction tax dates back to the 1950s. But the principle is much older and has its roots in the seventeenth century. For example, the United Kingdom has had stamp duty on shares issued by British companies since 1694. This tax was introduced at the time to provide the English king with income and was a form of ‘fiscal innovation.’
Global problems
An important argument for a financial transaction tax is to generate financing for pressing global issues. The United Nations has repeatedly found that promises by high-income countries to invest in things like climate funds are often not kept. It follows that the financial commitments are ineffective and inefficient.
No disruptive effect
Professor Bert Scholtens emphasizes that these financial transaction taxes, if implemented correctly, will not have a significant disruptive effect on market development and the liquidity of stock exchange trading.
Potential yield
The potential revenue from this tax, which should be introduced in the G-20 countries, is approximately 200 billion euros per year. For Professor Scholtens, it is crucial that these proceeds are spent on the intended purposes and not used (misused) for other purposes. That is why he and other scientists argue for allocating these resources to an international fund under the supervision of the United Nations.
Small group with great resistance
However, the introduction of a financial transaction tax is not without resistance. There is a lot of grumbling, especially from a small group of lobbyists. Although some countries have already introduced this tax, the path to widespread acceptance and global application remains a challenge.
Read the entire interview?
Would you like to read the interview with professor Bert Scholtens? You will find the article in our magazine ‘Tax Advice’ and in our knowledge base Nextens Naslag. With Nextens Naslag you are not only always up to date with the latest tax developments, but you also have essential calculation tools, templates and checklists at your disposal.