On Wednesday, France will become the first European country to impose a tax on financial transactions. This was a bad idea in the past; it's a worse one now. As the most significant fiscal measure to be enacted thus far by the Socialist government of PresidentFrancois Hollande, it’s also a disturbing sign. The 0.2 percent tax, loosely modeled on the ideas of the U.S. economistJames Tobin, will be applied to the purchase of shares in 109 French companies with market capitalizations of more than 1 billion euros ($1.2 billion). A similar levy will be imposed on high-frequency trading and so-called naked sovereign credit-default swaps. A Bloomberg News report recently showed that the tax is larded with loopholes, and the expected revenue is negligible: 170 million euros in 2012 and 500 million euros next year. At worst, it will frighten away investment and curb needed growth; at best, it is a distraction from the heavy lifting thatEurope’ssecond-largest economymust do to revive. The measures are part of an amended2012 budgetthat also includes a special tax on wealth, increased levies on company dividends, and rollbacks of reforms of France’s unsustainable social-welfare system and labor laws by the previous administration.... Continue to read.
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