Tobin tax

A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another. The tax is intended to put a penalty on short-term financial round-trip excursions into another currency. It discourages market speculators by making their activities uneconomic, and in this way, to increase stability in financial markets. The idea was originally pushed by former UK Prime Minister Gordon Brown in response to the financial crisis. More recently it has been formally proposed by the European Commission, with some suggesting the revenue could be used to tackle the financial crisis. It is now opposed by the current UK government, which argues that to be effective, the tax would need to be applied globally - not just in the EU - as most financial activities could quite easily be relocated to another country in order to avoid the tax.