Research On The Feasibility Of Levying Financial Transactions Tax On Chinese Banks

Since the wave of the global financial crisis in 2008 and the European debt crisis in 2010, the issue of financial sector excessive speculation without effective re gulation has attracted worldwide attention. Now facing heavy debts in Europe, the European Union began to consider using taxation to regulate the financial industry. The EU have proposed a variety of tax proposals since 2010. Stabilization of C hina financial market is a hot issue nowadays. Can we learn from the experience of the EU financial transaction tax? This article will discuss the effects on the banking industry in China if EU financial transaction tax would be levied in 2016.This paper will apply theoretical and empirical research methods to research on the feasibility of levying financial transactions tax on banks in China. Theoretical research part make a brief introduction of the theory of International capital flows and the ETR,then make a deeper research of the EU financial transaction tax; Empirical research part analysis the international capital mobility through C hina’s international balance of payments, and through the formulas for estimating the scale of international speculative capital, t here need to adjust the three items as amount of foreign exchange reserves, foreign trade surplus and FDI: the amount of foreign exchange reserves increased to adjust the exchange rate change and the portion of the investment income; foreign trade surplus adjustment is using time-series regression simulate real trade surplus; FDI adjustment is using O LS regression model, select its three main factors to build regression models; secondly, it researches the tax burden of banking and make comparison with other industries and major international institutions, reuse listed bank data, and the main business income and their tax data to build a panel regression model to analyze the effectiveness of tax policy.Through this paper research, it had proved China exist a large scale of the international speculative capital, and its volatility is larger, C hina levy tax on financial transactions to control international speculative capital, to prevent its disrupt China’s financial markets, it is necessary; At the same time, analyzing C hina’s financial sector(banking industry as a representative) and found their tax burden isn’t heavy, furthermore, it plays a good policy effect through indirect tax policy for banking to control their main business, therefore, our country impose the financial transaction tax is feasible. In the last part of this paper, for the financial transaction tax could be imposed by our country in the future, it puts forward relevant policy recommendations drawing on the experience of EU.The innovation point of this paper are as follows: the first is the EU financial transaction tax will be started from 2016, choosing it as the angle of view is advanced; the second is the selection of the banking as a representative to analysis, can pave the way for the analysis of other financial institutions; the third is the research method which combine with the theoretical and empirical, qualitative analysis on the effect of FTT will produce, also selected empirical data of listed banks in C hina to carry on quantitative research, using comprehensive research method.