10/2/11

BIS Data for France and the other Eurozone countries

I've finally got round to adding something to my French language webpage. I've done the same sort of analysis of the latest BIS data for 2010 that I did for the UK, but using the French data. The total that I obtain (268 trillion euros) is certainly a lot lower than for the UK - they have a lot less of the frenetic financial trading that characterises the city of London -  but it's still very respectable. You can find all the gory details here.

Note that a 0.1% tax on 268 trillion euros would generate nearly three times as much revenue as all the current sources of income used by the French government. This again demonstrates that FTTs really can be used to replace conventional taxes, even in countries that do not have the bloated financial sector that characterises the UK.

I've also extracted the numbers for the four other Eurozone countries that figure in the BIS dataset, and all five countries are shown in the table below.

The total transactions for France, Germany, Belgium, Italy and the Netherlands come to €1572 trillion. I note that a 0.1% FTT applied to that would generate nearly 16 trillion euros - more that 27 times more than the €57 billion estimated by the EU, despite the fact that we have only taken into account 5 of the 17 eurozone countries. I presume that this difference comes from the elasticity parameters that the EUs economists used for their calculations. This is their way of estimating how much reduction in trading would be produced by the introduction of the tax. But I imagine that they will be forced to accept that it is pure guesswork. They also used a smaller value of 0.01% for taxing derivative trading, but this will not make much difference here because only a small fraction of the transactions in these countries - less than about 7%.

The main conclusion of all this is that there is a desperate need to impose complete reporting throughout the European Union so that realistic proposals can be made. This is precisely what the EU wants to do, but George Osborne apparently intends to block. Given the urgency, I would personally propose that the tax should be introduced as soon as possible, and the rate adjusted to generate the required levels of revenue.

No comments:

Post a Comment