Austrian FM says no FTT before 2017 at the earliest and admits it may not happen at all. http://www.reuters.com/article/2015/05/08/eu-tax-idUSL9N0T403I20150508
I have noted that some liberal media are lamenting that TPP (trans pacific partnership) would prevent participating countries from introducing FTT. It probably has something to do with capital flow controls. It is difficult to get more reliable information at this time but any informed input on this would be welcome here.
My guess is that the tax will happen. The general public hates traders and thinks people who speculate are worthless and evil. The government thinks trading (like poker) is a complete waste of the work force. The big rub is that large institutional traders will probably get to skirt such a tax, at least to some degree.
1) As soon as tax rate is increased, there will be less trading volume obviously so that liquidity is another problem. In some country, there is 0.3% tax for the amount of the selling price. But the country has less volume than no tax country like US, UK, ... 2) If institutional trader pay less tax than most home traders, then it is going to be another problem.
1) is explained by a hypo example. Suppose you have a seed of 100K and new tax of 0.3%. A) Every month if you trade three time, then 0.3*3=0.9% which is compounded to annual 1.009^12= 1 + 0.11351. Every year about 11% of you asset is gone to tax, in adddition to brokerage and 1040 income tax. B) Every month if you trade 10 times ( for the roughly 20 days per month), then 0.3*10=3%. There will be annual compounded 1.03^12 = 1 + 0.425761. Every year 42% of you asset is gone. Let you trade for 50 years (from 30 to 80) to accumulate total tax amount. Before compounding A) is 11K*50=550K and B) is 42K*50=2100K. Will you stay in the country asking you to pay more than 1000K for his entire life? It will be a lot cheaper to fly and buy a new home, in different country offering less tax rate.
Home traders are meaningless. There are so few of them and such small numbers/amounts that it's worthless to not include institutions.
Does this tax make it impossible to be a profitable at home trader? Either swing trading or day trading? Like if the volume goes down, and the spread increase, as such the volatility would also increase so that would mean more potential profit, no?
It's difficult to say until the tax happens. Exactly what they might tax, who, and how much is up in the air. There may be a way to trade around the issue. Frequent trading may no longer be profitable for example, but infrequent trading may still be profitable. Many of the most successful hedge funds in the world do not actually participate in high frequency trading. I do see a future where most speculation is outlawed because traders are (rightly or wrongly) blamed for some worldwide crash, but I think that is decades away. There are a lot of risks in this business. The biggest risk of all is that the business will become obsolete and you will have wasted 10 or 20 years of your life.
Imo the chances of the tax happening on a big scale in the next 3-5 years are infinitely smaller than they were earlier in this thread. Obama is definitely not going to implement one any time soon, and Europe is in a dead-lock. Expect that deadlock to last with Cameron being re-elected. Not a time to worry too much...