Levies on Equity Transactions to Finance Climate Action
The Urgent Need for New Climate Resources
Addressing the devastating impacts of a warming climate requires significant levels of new resources, especially for low-income developing countries. These nations have contributed little to the accumulation of greenhouse gases but are disproportionately affected by adverse climatic conditions. To respond effectively to climate loss and damage, financial support must be provided in the form of grants, ensuring these countries do not sink under massive debts they did not cause.
A highly effective but underused mechanism to generate these funds is the Financial Transactions Tax (FTT) applied to equity trading. Currently, FTTs are implemented in approximately 30 countries and generate around $17 billion annually. A 2025 study commissioned by the Global Solidarity Levies Task Force (GSLTF), an intergovernmental initiative co-chaired by Barbados, France, and Kenya, demonstrates that a broader application of these taxes could radically scale up international development and climate funding.
The Revenue Potential of Expanded FTTs
Authored by economic experts Gunther Capelle-Blancard and Avinash Persaud, the report provides robust estimates of the revenue governments could raise if they adopted ambitious FTTs.
By extending FTTs to countries that currently do not have them, or by increasing existing rates to match the UK's 0.5% rate, the world could raise an additional $87 billion per year.
This expansion would bring the total global revenue raised by taxing equity transactions to $104 billion annually.
The vast majority of this additional income would be generated in high-income and upper-middle-income countries.
North America (the United States and Canada) could generate $54 billion annually, with the United States alone capable of generating over $50 billion a year.
Other countries with the highest potential to generate new revenue include Germany, Japan, and Canada.
Real-World Proof: The French Experience
To model the impact of the tax, the authors looked to the successful implementation of the FTT in France. France introduced a new FTT framework in 2012, which successfully demonstrated that an individual country can implement this tax independently without fundamentally disrupting its financial markets.
Over a 10-year period, adjusted for inflation, France's cumulative FTT revenues amounted to $15.3 billion.
Multiple academic studies utilizing Difference-in-Difference comparisons found that the French FTT had no significant negative impact on market liquidity or price volatility.
While the initial introduction of the tax reduced the turnover of taxed securities by around 20%, a subsequent tax rate increase from 0.2% to 0.3% in 2017 showed no discernible impact on turnover.
Enforceability and the "Issuance Principle"
The financial industry often opposes FTTs, claiming they are unenforceable and will lead to capital flight. However, the report clarifies that modern stamp duties on financial transactions are highly robust.
Most existing FTTs operate on the "issuance principle," meaning the tax is applied based on the country where the financial instrument was issued, regardless of where the buyer or seller is physically located. For example, if an American tax resident purchases a share of a French company using a bank account in Hong Kong, the tax is still automatically collected when the purchase is cleared and settled. Furthermore, in jurisdictions like the UK, the legal title to a security is simply not recognized unless the tax has been duly paid, making the mechanism entirely self-enforcing.
Combating Destructive Short-Termism
Beyond raising vital climate finance, FTTs offer a powerful secondary benefit: they help correct the market's dangerous bias toward short-termism.
Currently, market valuations are dominated by short-term trading, which ignores long-term sustainability. For instance, current market valuations place substantial value on long-term fossil fuel reserves that cannot be safely exploited if the world is to avoid catastrophic global warming. A small, enforceable FTT reduces this bias by making business models based on heavy short-term trading less profitable, effectively pushing market focus toward long-term, sustainable investments.
By successfully curbing unproductive high-frequency trading and generating billions in effortless income from non-essential activity, the FTT stands out as one of the simplest and most effective levers available to fund global climate act
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