A financial transaction tax would have a positive impact on growth and jobs

The introduction of a financial transaction tax in Europe could benefit the European economy and raise the level of growth, according to a study written by two prominent economists, Professors Stephany Griffith-Jones and Avinash Persaud

The study was presented today in Brussels during a press conference chaired by S&D Euro MP Anni Podimata who will draft the European Parliament's report on the Commission's proposal.

Mrs Podimata welcomed the study and said: "This study confirms what we have been saying all along. The financial markets have to make a fair contribution to the crisis they provoked.

"An FTT will reduce the fragmentation of the internal market. Put together with other tools, it will act as a disincentive to high frequency trading and other practices which increase risk without ensuring liquidity.

"This would contribute to a better financing of the real economy, encourage investment and job creation in the EU.

"The S&D Group is against putting the entire burden on ordinary taxpayers, and calls for measures to boost growth. In this sense, an FTT is an integral part of this approach".

Professor Stephany Griffith-Jones confirmed the benefits of an FTT. Among them, she said: "The Commission has calculated that it would only have a -0.2% effect on growth. It takes into account the fact that a very small part of investment by credit companies would actually be taxed and that high frequency trading would be decreased.

"But, in our study, we argue that an FTT would also contribute to reduce the risk of a future crisis. When this is taken into account, you obtain a positive effect on growth of about a quarter of a percent".

Professor Stephany Griffith-Jones rejected the argument that the tax would not be feasible because of fraud: "In the past, the same was said about income tax, which is indeed avoided but which still raises a lot of money", she said.

To read the full text - "Financial Transaction Taxes, Study by professors Stephany Griffith-Jones and Avinash Persaud," click here

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