Transaction Tax (Financial Transaction Tax)

A transaction tax is no longer a reference to monetary institutions per se; instead, such is charged solely concerning the particular transactions assigned as taxable. Consequently, if an institution does not conduct the taxable transaction, it will not be subject to the transaction tax. Moreover, if an institution makes only one of these transactions, it will only be taxed once.

Thus, such tax neither includes a financial activities tax, bank tax nor, financial stability contribution. The purpose of this clarification is to elucidate whether an inducement to monetary transaction complications will specifically dissuade excessive conjecture without discouraging any other activity.

In simpler terms, Transaction Taxes are levied on foreign exchange, bonds, and other fiscal instruments. The most prominent transaction tax is the “Tobin Tax”. It is a tax imposed on foreign exchange conversions in order to dissuade ephemeral currency speculation originally suggested by an economist, James Tobin.

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