The name is absent

elastic.

5. Design and implementation

If one were to design a financial transactions tax in its broadest form, too many
considerations would arise: identification of coverage, short-term versus long-term
transactions, treatment of debt versus equity, derivatives, financial intermediaries, foreign
substitutions, and so on. It would be more productive, therefore, to be restricted, in its global
variant, to the Tobin tax on international transactions involving the conversion of one currency
into another. Tobin envisaged an international tax whenever foreign currency conversion was
involved, at a uniform rate, on all spot transactions in domestic security and foreign exchange
markets, and on payments for goods and services across currency areas.

The problem with design has been succinctly put by the proponents of the tax
themselves. Eichengreen, Tobin and Wyplosz (1995) have noted that, "...a transaction tax on
purchases and sales of foreign exchange would have to be universal and uniform; it would
have to apply to all jurisdictions, and the rate would have to be equalised across markets.
Were it imposed unilaterally by one country, that country’s forex markets would simply move
offshore" (p.165). Thus a consensus would be needed since even a critical mass of
likeminded countries would be insufficient to carry out a fully successful implementation of
the tax. '⁸

To sum up, for its success, the Tobin tax would need international policy coordination:
tax policy (tax base and rates), tax administration, and the sharing of the proceeds of the tax.
Thus the tax would have to be internationally agreed upon and administered by each
government. Rules and regulations would have to be established by an international

In contrast, recall that it was argued in the case of a global carbon tax that universal
participation right from the beginning may not be essential to begin implementation.
Of course, one could argue that, if universal participation was not imposed right from
the beginning for the global carbon tax, investment would move to states with less
stringent requirements. However, first, that would not happen as quickly as foreign
exchange markets could move and, second, the slower adherence of the Montreal
Protocol in developing countries does not, by itself, seem to have generated any
massive transfer of foreign direct investment to their shores.

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