Leading Swedish politicians firmly oppose Tobin tax

With Sweden's disastrous experimentation in taxing financial transaction still fresh in their memory, the leading centre-right Moderate party politicians in the country are stunned as more EU leaders are suggesting just that, even if it means going forward with the tax unilaterally. Current Swedish finance minister Anders Borg remembers vividly what happened with the Tobin tax experiment in Sweden and is firmly opposed to another go at it.

In 1984 left-wing Social Democratic Party- led government introduced a half a percent financial transaction tax on equity sales and purchases in Sweden and later doubled it. Towards the end of the decade also a 0.002% tax on fixed-income securities with < 90 day maturity was put into play and so were taxes on currency transactions.

Financial transactions fell rapidly and so did revenues from capital gains taxes, already offsetting much of direct financial gains. Reduced liquidity of shares made it harder for companies to raise capital. Taxes were levied on brokerage services and trading moved onto foreign financial service providers, mainly in London (This should already make it clear, that any agreement without Great Britain on board the financial tax train, something their Prime Minister David Cameron has said will not happen during his watch, would be ludicrous). By the end of 1991 with a moderate coalition government taking over the cabinet of Sweden, the taxes were removed altogether.

It has been estimated that considering all the extra red tape and control required, the tax could even have a negative yield. Add that to the loss of a financial hub status and what you would get in the event of such a tax passing is another decision mainly based on populist thinking and internal politicking, stemming from a re-election campaign in France and the impetus for EU politicians to blame the markets for self-imposed problems. EU has often tried to lead the way in various issues and hasn’t been too worried about weakening its own standing in global competition in doing so. Thus far it has largely failed to make other regions to follow its lead in practically all such ventures.