The Case for a Green Financial Transaction Tax

Gunther Capelle-Blancard ()
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Gunther Capelle-Blancard: Université Paris 1 Panthéon-Sorbonne, Centre d'Econonomie de la Sorbonne & Paris School of Business, https://sites.google.com/site/capelleblancard/

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: The aim of this note is to assess whether and how the Financial Transaction Tax (FTT) could be "greened" - that is, adapted or utilized to support environmental objectives and the financing of the transition to a more sustainable economy. While traditionally conceived as a regulatory tool, the FTT also holds unexploited potential as an instrument for climate finance and broader environmental alignement. This paper outlines five complementary arguments in favor of a green FTT: (1) its capacity to mobilize stable, international funding for global public goods; (2) its symbolic relevance in light of the financial sector's contribution to social and environmental disruption; (3) its ability to modestly lengthen investment horizons and counteract excessive short-termism; (4) its potential to enhance public trust in finance by matching rhetoric about sustainable finance with contributions; and (5) its propective use as a differentiated tool to reward environmentally responsible issuers. The paper also includes a first quantitative assessment of potential revenues from a tiered green FTT, illustrating how such a mechanism could operationalize the principle of common but differentiated responsibilities and respective capabilities in climate finance. While recognizing practical limitations (in terms of governance, data reliability, ans risk of complexity) the paper concludes that a well-calibrated green FTT could be a simple yet effective lever in aligning financial markets with the ecological transition

Keywords: Financial transaction tax; Securities Transaction Tax; Tobin tax; Innovative Financing; Climate Finance (search for similar items in EconPapers)
JEL-codes: G1 H2 Q5 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2025-06
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http://mse.univ-paris1.fr/pub/mse/CES2025/25012.pdf (application/pdf)
https://shs.hal.science/halshs-05116286

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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:25012

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