Somewhere there will be a country with enough sense not to impose this tax. All the trading will move there.
The Swedes tried this to finance the bailouts from their real estate/banking crisis and it was a complete dud. Transactions moved to London and elsewhere and revenues from the tax fell short of expectations. The tax was therefore scrapped a year or two after introduction. It was a complete failure. The Swedes are on a mission across Europe trying to talk the Sarkozys and Merkels out of the insanity of this idea.
the best thing that can happen now is the mkt goes in long bear mkt and this talk will cease as nobody will try to add taxes to hurting investors.the reason this tax talk came on strong is congress saw the huge mkt rise and said"hey they've made trillions and we want some of that $.lets hope the bank tax passes and the heat will fade on this stock tax.the tax is fundamentally flawed. how do you tax somebody on a losing trade?
The Swedes are looking for a tax based on the balance sheet of a financial institution, rather than per transaction: http://www.thelocal.se/24462/20100119/ "Borg said that a tax on final balance sheets -- different from a tax on individual transactions as mooted since the 1970s -- would get round the problem of banks moving to more favourable locations."
The tax is on the amount of transaction. You pay it even if you have losses. You pay this tax even if you lose money.
If I recall correctly, it took about 8 years to get rid of all the transactions taxes - before it was abolished, the rate was increased from 1% to 2%. Volume collapsed almost immediately, yet socialist politicians responded by doubling the rate and keeping it going for almost a decade. That's a long time to be out of business. Hopefully the Swedes are successful in their persuasive efforts, however everyone should realise that politicians and especially voters are not renowned for listening to reasoned logic when emotions are running high. WWI was pretty fucking irrational and that happened (Hey, let's wipe out half our youth, ruin our economies, and lose our empires in exchange for a minor boundary shift in the Balkans - great idea!). Price controls are economic stupidity and they have been enacted time after time. Also, don't underestimate how many people would want this to happen *even if they knew the consequences*. The desire to stick it to the speculators is strong. Our main hope is that certain key politicians (remember, the people who 99% of ET keep slagging off all the time) manage to stall this for long enough for the economy to slowly recover and memories of the financial crisis to dim somewhat. The populist anger will diminish and they'll move on to more pressing matters like American Idol.
You're correct and it's at 0.5% per transaction. CFDS were created to skirt the rule and UK daytraders pretty much exclusively trade CFDS these days.
And they still haven't learned... the new & improved "tight" standard for FHA loans is 3.5% down unless your FICO score is less than 580, in which case it's 10% down. http://money.cnn.com/2010/01/19/real_estate/fha_loan_requirements/