Acta Univ. Agric. Silvic. Mendelianae Brun. 2015, 63(2), 627-637 | DOI: 10.11118/actaun201563020627

Financial Transaction Tax: Determination of Economic Impact Under DSGE Model

Veronika Solilová, Danuše Nerudová
Department of Accounting and Taxes, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

The discussion about the possible taxation of the financial sector has started in the European Union as a result of the financial crisis which has spread to the Europe from the United States in 2008 and consequently of the massive financial interventions by governments made in favour of the financial sector. On 14 February 2013, after rejection of the draft of the directive introducing a common system of financial transaction tax in 2011, the European Commission introduced the financial transaction tax through enhanced cooperation. The aim of the paper is to research economic impact of financial transaction tax on EU (EU27 or EU11) with respect to the DSGE model which was used for the determination of impacts. Based on our analysis the DSGE model can be considered as underestimated in case of the impact on economic growth and an overestimated in case of the revenue collection. Particularly, the overall impact of the financial transaction tax considering cascade effects of securities (tax rate 2.2%) and derivatives (tax rate 0.2%) is ranged between -4.752 and 1.472 percent points of GDP. And further, is assumed that the relocation effects of business/trade can be in average 40% causes a decline of expected tax revenues in the amount of 13bn EUR. Thus, at a time of fragile economic growth across the EU and the increased risk of recession in Europe, the introduction of the FTT should be undesirable.

Keywords: financial transaction tax, economic growth, EU, enhanced cooperation, DSGE model
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The paper presents the results of the research in the project GA CR No. 13-21683S "The quantification of the impact of the introduction of Common Consolidated Corporate Tax Base on the budget revenues in the Czech Republic".

Prepublished online: May 10, 2015; Published: April 1, 2015  Show citation

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Solilová, V., & Nerudová, D. (2015). Financial Transaction Tax: Determination of Economic Impact Under DSGE Model. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 63(2), 627-637. doi: 10.11118/actaun201563020627
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