I wasn't actually aware of this financial transaction tax until just recently, I knew we had capital gains which is a tax specifically designed for this sort of thing anyway, but it looks to me like the EU is essentially trying to enforce a VAT tax on all transactions, they also mentioned currencies, could this include a move against Bitcoin?
I doubt cryptocurrencies are a factor with regard to this. It's more to do with speculators in more traditional markets.
The problem with high frequency trading, HFT for short, is that it's being abused. In a natural market, price discovery works by people deciding how much they want to buy and sell something for. But with HFT, they can run a trading algorithm in such a way that it will make thousands of trades to move the market towards a predetermined price. Essentially, you can use HFT to manipulate prices. There's normally an article about it at least once a week on
ZeroHedge.
Placing a very small tax on each trade would discourage using such algorithms and hopefully put an end to at least
some of the market rigging going on in the finance sector.
Many proponents of the tax argue that the funds raised could be
spent on social issues, like health, education, welfare, etc. But it remains to be seen if the UK government would actually use the money for that or not. I have a feeling many will be disappointed as their first priority will likely (but wrongly) be setting up another tax break for the finance sector to make up for this new tax being brought in against their will.
