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Tobin Tax To Hit Spain In 2013

|Includes: LVS, SAN, Telefonica S.A. (TEF)

Spain is set to become the second European country, after France, to set a tax on financial transactions, in order to deter "speculators" and short-term trading. The government is expected to approve the measure on the next cabinet meeting. Brokers will act as tax collectors and will have to report on all trades quarterly. Many derivatives will also be taxed, although it is unclear if it will apply to all. Apparently FX and commodities markets will escape the scope of this new regulation, but we will have to read the small print.

The tax is expected to be similar to France's 0.2% of the value of stocks bought or sold. Effectively killing the HFT business, or simply displacing it elsewere.

The idea of a Tobin Tax has been kicking around for ages, but it has become especially popular since 2008 as a way to discourage "speculation", without having to raise interest rates. After all "free money" in the form of negative real rates is the best incentive to gamble, speculate an spend... but governments only dislike some forms of gambling. Ironically this news comes on the heels of rumours that Sheldon Adelson's "Eurovegas" will soon start construction in Madrid. However this gambling haven will probably get tax breaks as part of a package of "sweeteners" that Adelson demanded in exchange for picking Spain.