A financial transactions tax (FTT) imposes a small percentage levy on the value of trades in financial instruments. Variants tax equities only, equities plus bonds, or a broader basket including derivatives. Several countries levy some form of FTT; the U.S. once had a small stamp tax on stock transfers but ended it in the mid-twentieth century.
Proponents argue an FTT raises substantial revenue with limited impact on long-term investors and reduces socially wasteful high-frequency trading. Critics counter that the tax cascades through retirement accounts, pension funds, and market-making activity, raising costs for ordinary savers and potentially harming liquidity and price discovery.
Estimated revenue depends heavily on rate, base, and behavioral response. Designs range from very low rates on equities and derivatives to higher rates targeted at particular venues or instruments.