Editing Tobin tax (section)

===Swedish financial transaction taxes===
{{See also|Financial transaction tax}}

Wrobel's paper highlighted the Swedish experience with financial transaction taxes.<ref name="lessons" /> In January 1984, Sweden introduced a 0.5% tax on the purchase or sale of an equity security. Thus a round trip (purchase and sale) transaction resulted in a 1% tax.  In July 1986 the rate was doubled. In January 1989, a considerably lower tax of 0.002% on fixed-income securities was introduced for a security with a maturity of 90 days or less. On a bond with a maturity of five years or more, the tax was 0.003%.

The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million.<ref name="papers.ssrn.com">{{cite journal|last1=Campbell|first1=John Y.|last2=Froot|first2=Kenneth A.|date=December 1993|title=International Experiences with Securities Transaction Taxes (NBER Working Paper No. W4587)|ssrn=338864}}</ref> In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kronor by 1988.<ref name="ideas.repec.org">{{cite journal|last1=Umlauf|first1=S|year=1993|title=Transaction taxes and the behavior of the Swedish stock market|journal=Journal of Financial Economics|volume=33|issue=2|page=227|doi=10.1016/0304-405X(93)90005-V}}</ref>

On the day that the tax was announced, share prices fell by 2.2%. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement. When the tax was doubled, prices again fell by another 1%. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.

Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of [[futures trading]] fell by 98% and the options trading market disappeared.   On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely.  Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s and 2000s.<ref>{{Cite book|last1=Hemmelgarn|first1=Thomas|last2=Nicodeme|first2=Gaetan|date=2012-02-23|title=Can Tax Policy Help to Prevent Financial Crisis?|language=en-US|doi=10.1093/acprof:oso/9780199698165.001.0001|isbn=9780199698165|url=http://fdslive.oup.com/www.oup.com/academic/pdf/openaccess/9780199698165.pdf|hdl=10419/118674}}</ref>

====Tobin tax proponents reaction to the Swedish experience====
The Swedish experience of a transaction tax was with purchase or sale of equity securities, fixed income securities and derivatives. In global international currency trading, however, the situation could, some argue, look quite different.

Wrobel's studies do not address the global economy as a whole, as James Tobin did when he spoke of "the nineties' [[liquidity crisis|crises]] in Mexico, South East Asia and Russia,"<ref name="eumed1" /><ref name="spiegel1">{{cite web|url=http://service.spiegel.de/digas/find?DID=20017795|title=Archivsuche - Archiv - SPIEGEL ONLINE - Nachrichten<!-- Bot generated title -->|website=spiegel.de}}</ref> which included the [[1994 economic crisis in Mexico]], the [[1997 Asian Financial Crisis]], and the [[1998 Russian financial crisis]].