George Soros On Tobin Tax

George Soros: Open Societies, Sovereignty, and International Terrorism | Asia Society: "There has been a lot of discussion about the so-called Tobin tax on currency transactions. I think there is a case for such a tax, not only on currency transactions, but also on all financial transactions. But it is different from the one that has been put forward by James Tobin. It is not at all clear to me that a Tobin tax would reduce volatility in the currency markets. It is true that it may discourage currency speculation but it would also reduce the liquidity of the marketplace, so that chunky transactions, such as mergers and acquisitions, would have a greater impact on exchange rates. The case for a Tobin-type tax is different. The globalization of financial markets has given financial capital an unfair advantage over other sources of taxation. A tax on financial transactions would redress the balance. Why should there be a Value Added Tax (VAT) but no tax on financial transactions? On these grounds, the tax ought to be extended to all financial markets and not only currency markets. There are, however, many serious problems concerning the implementation of a Tobin tax. How to tax derivatives and synthetic instruments? How to collect the tax? Collection has to be worldwide including tax havens. How to enforce the tax? The collecting country has to be given a share of the proceeds. How big a share? All these problems could be resolved but they could also serve as an excuse for not introducing a Tobin tax. Moreover, it is not enough to introduce a tax; we must also ensure that it is put to good use."