Thursday, 30 June 2011

Italy: Desperate Fiscal Proposals

The proposed introduction of a 0.15 per cent tax on financial transactions and a 35 per cent tax on profits from proprietary trading by the banks (let's hope there are profits!) will do nothing but further strangle the financial marketplace. In an environment where the overall economy stagnates for the better part of the past ten years this can not be seen as an intelligent measure. In addition, the definitions required to make the fiscal net reasonably workable (which transactions? which institutions? - if only banks will that not give a tremendous boost for the 'shadow banking system'?) will not be worked out all that easily. As always, the political kleptocracy's instinct is to rely more on tax increases rather than conduct a root-and-branch reform of misdirected spending policies.

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