Photo: ulrich_berkner via flickr
Anders Borg, Sweden’s finance minister, has told the BBC that a European financial transaction tax won’t work, citing his countries own experiment with the tax.When Sweden began taxing financial transactions in the 1980s, “between 90%-99% of traders in bonds, equities and derivatives moved out of Stockholm to London,” Borg said.
“The impact was basically that we did not get any tax revenue. It brought in very little tax money while moving most of the businesses outside of Sweden.
“We abandoned [the tax] because it was a very, very bad functioning tax.”
Sweden implemented its tax in 1984. It was a 0.5% tax on a purchase or sale of an equity security. It was doubled in 1986 and subsequently lowered. In 1991 the tax was abolished following disappointing revenues.
Borg argues that the countries example should be a lesson to Europe, and that traders would flee to the US or Asia if the tax was implemented.
Angela Merkel and Nicolas Sarkozy were met with stiff criticism when they proposed a transaction tax in August.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.