Avoiding the Pitfalls in Taxing Financial Intermediation

Enthusiasts for financial sector tax reform typically come either with some form of "flat tax" (including value added tax on financial services, zero taxation on capital income, or a universal transactions tax) or advocating corrective ta...

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Main Author:	Honohan, Patrick
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTING ADMINISTRATIVE COSTS ARBITRAGE ASYMMETRIC INFORMATION BALANCE SHEET BANK ACCOUNTS BANK RISK BANKING CRISES BANKS BENCHMARK BORROWING CAPITAL ADEQUACY CAPITAL FLOWS CAPITAL GAINS CAPITAL TAXES CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES COLLECTION CONTAGION CORPORATE INCOME TAX DEBT DEFICITS DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSITS DISINTERMEDIATION DIVIDENDS ECONOMETRIC ESTIMATES ECONOMIC ANALYSIS ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC RENT ECONOMISTS ELASTICITIES EQUITY CAPITAL EXPECTED RETURN FACTORING FINANCIAL ENGINEERING FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL TRANSACTIONS FORECASTS FOREIGN EXCHANGE GDP GOVERNMENT BONDS GOVERNMENT SECURITIES GROSS REVENUE HOUSING INCOME GROUPS INCOME TAXES INDEXATION INFLATION INHERITANCE INTEREST INCOME INTEREST RATE INTEREST RATES LENDING RATES LEVIES LIQUIDITY MARKET DISCIPLINE MARKET DISTORTION MARKET POWER MONETARY POLICY MORAL HAZARD NOMINAL INTEREST RATES OPPORTUNITY COST PROPERTY OWNERSHIP PROVISIONING PROVISIONS PUBLIC SERVICES PURE PROFIT RESERVE REQUIREMENT RESERVE REQUIREMENTS RETIREMENT RISK AVERSION RISK MANAGEMENT SALES TAXES SAVINGS SIDE EFFECTS STOCK MARKETS SYSTEMIC BANKING CRISES SYSTEMIC RISK TAX TAX ADMINISTRATION TAX COLLECTION TAX INCENTIVES TAX RATES TAX REFORM TAX REVENUE TAX SYSTEMS TAXATION TRADE TAXES TRANSPARENCY VALUATION WAGES WEALTH FINANCIAL INTERMEDIATION TAX ASSESSMENTS TAX REFORMS CAPITAL INCOME TAXATION REVENUE MEASURES CREDIT WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2003/05/2378821/avoiding-pitfalls-taxing-financial-intermediation http://hdl.handle.net/10986/18184

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spelling	okr-10986-181842021-04-23T14:03:41Z Avoiding the Pitfalls in Taxing Financial Intermediation Honohan, Patrick ACCOUNTING ADMINISTRATIVE COSTS ARBITRAGE ASYMMETRIC INFORMATION BALANCE SHEET BANK ACCOUNTS BANK RISK BANKING CRISES BANKS BENCHMARK BORROWING CAPITAL ADEQUACY CAPITAL FLOWS CAPITAL GAINS CAPITAL TAXES CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES COLLECTION CONTAGION CORPORATE INCOME TAX DEBT DEFICITS DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSITS DISINTERMEDIATION DIVIDENDS ECONOMETRIC ESTIMATES ECONOMIC ANALYSIS ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC RENT ECONOMISTS ELASTICITIES EQUITY CAPITAL EXPECTED RETURN FACTORING FINANCIAL ENGINEERING FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL TRANSACTIONS FORECASTS FOREIGN EXCHANGE GDP GOVERNMENT BONDS GOVERNMENT SECURITIES GROSS REVENUE HOUSING INCOME GROUPS INCOME TAXES INDEXATION INFLATION INHERITANCE INTEREST INCOME INTEREST RATE INTEREST RATES LENDING RATES LEVIES LIQUIDITY MARKET DISCIPLINE MARKET DISTORTION MARKET POWER MONETARY POLICY MORAL HAZARD NOMINAL INTEREST RATES OPPORTUNITY COST PROPERTY OWNERSHIP PROVISIONING PROVISIONS PUBLIC SERVICES PURE PROFIT RESERVE REQUIREMENT RESERVE REQUIREMENTS RETIREMENT RISK AVERSION RISK MANAGEMENT SALES TAXES SAVINGS SIDE EFFECTS STOCK MARKETS SYSTEMIC BANKING CRISES SYSTEMIC RISK TAX TAX ADMINISTRATION TAX COLLECTION TAX INCENTIVES TAX RATES TAX REFORM TAX REVENUE TAX SYSTEMS TAXATION TRADE TAXES TRANSPARENCY VALUATION WAGES WEALTH FINANCIAL INTERMEDIATION TAX ASSESSMENTS TAX REFORMS FINANCIAL SERVICES CAPITAL INCOME TAXATION REVENUE MEASURES CREDIT DEPOSIT INSURANCE FINANCIAL INTERMEDIATION WEALTH Enthusiasts for financial sector tax reform typically come either with some form of "flat tax" (including value added tax on financial services, zero taxation on capital income, or a universal transactions tax) or advocating corrective taxes designed to offset market failures or achieve other targeted objectives. As a result the tax systems in most countries often end up with a complex mixture. Honohan argues that practical policy for taxation of the financial sector needs to take into account two key features of the sector: its capacity for arbitrage and its sensitivity to inflation and thus to nonindexed taxes. Where these aspects have been neglected, poorly constructed tax systems-whether the consequence of a drive for revenue or of misdirected sophistication-often have sizable unexpected side effects. A defensive stance making the minimization of such distortions as its cornerstone is the best policy. 2014-05-05T21:47:32Z 2014-05-05T21:47:32Z 2003-05 http://documents.worldbank.org/curated/en/2003/05/2378821/avoiding-pitfalls-taxing-financial-intermediation http://hdl.handle.net/10986/18184 English en_US Policy Research Working Paper;No. 3056 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING ADMINISTRATIVE COSTS ARBITRAGE ASYMMETRIC INFORMATION BALANCE SHEET BANK ACCOUNTS BANK RISK BANKING CRISES BANKS BENCHMARK BORROWING CAPITAL ADEQUACY CAPITAL FLOWS CAPITAL GAINS CAPITAL TAXES CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES COLLECTION CONTAGION CORPORATE INCOME TAX DEBT DEFICITS DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSITS DISINTERMEDIATION DIVIDENDS ECONOMETRIC ESTIMATES ECONOMIC ANALYSIS ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC RENT ECONOMISTS ELASTICITIES EQUITY CAPITAL EXPECTED RETURN FACTORING FINANCIAL ENGINEERING FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL TRANSACTIONS FORECASTS FOREIGN EXCHANGE GDP GOVERNMENT BONDS GOVERNMENT SECURITIES GROSS REVENUE HOUSING INCOME GROUPS INCOME TAXES INDEXATION INFLATION INHERITANCE INTEREST INCOME INTEREST RATE INTEREST RATES LENDING RATES LEVIES LIQUIDITY MARKET DISCIPLINE MARKET DISTORTION MARKET POWER MONETARY POLICY MORAL HAZARD NOMINAL INTEREST RATES OPPORTUNITY COST PROPERTY OWNERSHIP PROVISIONING PROVISIONS PUBLIC SERVICES PURE PROFIT RESERVE REQUIREMENT RESERVE REQUIREMENTS RETIREMENT RISK AVERSION RISK MANAGEMENT SALES TAXES SAVINGS SIDE EFFECTS STOCK MARKETS SYSTEMIC BANKING CRISES SYSTEMIC RISK TAX TAX ADMINISTRATION TAX COLLECTION TAX INCENTIVES TAX RATES TAX REFORM TAX REVENUE TAX SYSTEMS TAXATION TRADE TAXES TRANSPARENCY VALUATION WAGES WEALTH FINANCIAL INTERMEDIATION TAX ASSESSMENTS TAX REFORMS FINANCIAL SERVICES CAPITAL INCOME TAXATION REVENUE MEASURES CREDIT DEPOSIT INSURANCE FINANCIAL INTERMEDIATION WEALTH
spellingShingle	ACCOUNTING ADMINISTRATIVE COSTS ARBITRAGE ASYMMETRIC INFORMATION BALANCE SHEET BANK ACCOUNTS BANK RISK BANKING CRISES BANKS BENCHMARK BORROWING CAPITAL ADEQUACY CAPITAL FLOWS CAPITAL GAINS CAPITAL TAXES CAPITALIZATION CENTRAL BANK CENTRAL BANKS CLOSED ECONOMIES COLLECTION CONTAGION CORPORATE INCOME TAX DEBT DEFICITS DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSITS DISINTERMEDIATION DIVIDENDS ECONOMETRIC ESTIMATES ECONOMIC ANALYSIS ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC RENT ECONOMISTS ELASTICITIES EQUITY CAPITAL EXPECTED RETURN FACTORING FINANCIAL ENGINEERING FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL TRANSACTIONS FORECASTS FOREIGN EXCHANGE GDP GOVERNMENT BONDS GOVERNMENT SECURITIES GROSS REVENUE HOUSING INCOME GROUPS INCOME TAXES INDEXATION INFLATION INHERITANCE INTEREST INCOME INTEREST RATE INTEREST RATES LENDING RATES LEVIES LIQUIDITY MARKET DISCIPLINE MARKET DISTORTION MARKET POWER MONETARY POLICY MORAL HAZARD NOMINAL INTEREST RATES OPPORTUNITY COST PROPERTY OWNERSHIP PROVISIONING PROVISIONS PUBLIC SERVICES PURE PROFIT RESERVE REQUIREMENT RESERVE REQUIREMENTS RETIREMENT RISK AVERSION RISK MANAGEMENT SALES TAXES SAVINGS SIDE EFFECTS STOCK MARKETS SYSTEMIC BANKING CRISES SYSTEMIC RISK TAX TAX ADMINISTRATION TAX COLLECTION TAX INCENTIVES TAX RATES TAX REFORM TAX REVENUE TAX SYSTEMS TAXATION TRADE TAXES TRANSPARENCY VALUATION WAGES WEALTH FINANCIAL INTERMEDIATION TAX ASSESSMENTS TAX REFORMS FINANCIAL SERVICES CAPITAL INCOME TAXATION REVENUE MEASURES CREDIT DEPOSIT INSURANCE FINANCIAL INTERMEDIATION WEALTH Honohan, Patrick Avoiding the Pitfalls in Taxing Financial Intermediation
relation	Policy Research Working Paper;No. 3056
description	Enthusiasts for financial sector tax reform typically come either with some form of "flat tax" (including value added tax on financial services, zero taxation on capital income, or a universal transactions tax) or advocating corrective taxes designed to offset market failures or achieve other targeted objectives. As a result the tax systems in most countries often end up with a complex mixture. Honohan argues that practical policy for taxation of the financial sector needs to take into account two key features of the sector: its capacity for arbitrage and its sensitivity to inflation and thus to nonindexed taxes. Where these aspects have been neglected, poorly constructed tax systems-whether the consequence of a drive for revenue or of misdirected sophistication-often have sizable unexpected side effects. A defensive stance making the minimization of such distortions as its cornerstone is the best policy.
format	Publications & Research :: Policy Research Working Paper
author	Honohan, Patrick
author_facet	Honohan, Patrick
author_sort	Honohan, Patrick
title	Avoiding the Pitfalls in Taxing Financial Intermediation
title_short	Avoiding the Pitfalls in Taxing Financial Intermediation
title_full	Avoiding the Pitfalls in Taxing Financial Intermediation
title_fullStr	Avoiding the Pitfalls in Taxing Financial Intermediation
title_full_unstemmed	Avoiding the Pitfalls in Taxing Financial Intermediation
title_sort	avoiding the pitfalls in taxing financial intermediation
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2003/05/2378821/avoiding-pitfalls-taxing-financial-intermediation http://hdl.handle.net/10986/18184
_version_	1764439105566932992

Avoiding the Pitfalls in Taxing Financial Intermediation

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