Determination of Revenue Potential of Financial Transaction Tax and its consideration as own resource of the EU budget
Determination of Revenue Potential of Financial Transaction Tax and its consideration as own resource of the EU budget

Author(s): Veronika Solilova, Danuše Nerudova
Subject(s): Economic policy, EU-Accession / EU-DEvelopment, Financial Markets, Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: Sustainability; funding; FTT; European Union; budget;
Summary/Abstract: Although the responsibility for realizing the Europe 2020 strategy is shared between the EU and its 28 member states, the main criticism of the current EU budget relates to the lack of a link between the budget and Europe 2020 strategy. Therefore a new budget design as well as alternative revenue sources is currently explored within a mid-term review. One of the possible candidates is a Financial Transaction Tax (FTT). To research FTT revenue potential, a model based on a remittance system was designed. We analyze full or partial replacement of VAT- and GNI-based own resources by the transfer of the tax revenues from a FTT raised on a national level to the EU budget. Our research revealed that the introduction of a FTT would be able to fully replace VAT-based own resources (except of variant B and E). In the case of GNI-based own resources, the full replacement of GNI-based own resources in the amount of USD 89,255 mil would only be reached by variant D. In the remainder of the cases, partial replacement would be achieved.

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