Evidence-based policy making? The Commission’s proposal for an FTT

To support its proposals for a Financial Transaction Tax (FTT) in the EU, the EU Commission published an Impact Assessment in 2011 that ran to 19 volumes. This research project sifts through this evidence to discover whether this evidence persuasively makes the case for an FTT. It does so within the framework of a three-step policy evaluation of the proposal. First, what are the proposal’s objectives? Second, are these objectives justified? Third, is the proposed tax the instrument which is best suited to achieve these objectives? Our central conclusion of this paper is that the Commission’s evidence is not persuasive and does not make the case for an FTT. Whilst some of the objectives pursued by the proposals are reasonable, others are questionable. More importantly, the Commission’s evidence does not support the choice of the FTT as the instrument which is best suited to achieve these objectives. More targeted and more efficient instruments should and could be used to achieve these objectives

Giorgia Maffini and John Vella. CBT Working Paper 15/15