A government committee is looking into the possibility of imposing a special duty for bank transactions being conducted electronically so as to avert further pension cuts. Experts are studying the types of transactions that could taxed via a Tobin tax, defined as a tax on spot conversions of one currency to another that is intended to put a penalty on short-term financial round-trip excursions into another currency. In Greece, the Tobin tax would be used for internal trade transactions if it is finally imposed.

The option is being examined in case there is no agreement with the four institutions of Greece’s creditors from the European Commission, European Central Bank, European Stability Mechanism and International Monetary Fund. If it is agreed upon, the duty will have a short-term nature so as to cover funding needs.

In this framework, a list of transactions that could be taxed is being explored so as to ensure that there aren’t negative consequences for the economy. It should be noted that, if imposed, the Tobin tax will be less than 1% perhaps even smaller.

For instance, rent payments at 300 euros would result in 0.3 euros (30 cents) charges for the 1% tax that would not greatly burden those charged or affect the market. Furthermore, such a tax would be negligible in regards to the burden on taxpayers shoulders but still be able to yield necessary funds required to avoid cutting main pensions.

In Greece, high unemployment has resulted in many households relying on pensions received by their elderly as their only source of income and further cuts would have disastrous repercussions. Nonetheless, Greece’s creditors are reluctant to accept Greek proposals such as increases to social security contributions that has the government scrambling to find other solutions e.g. special duties.

The Tobin tax had initially been created by Nobel laureate economist James Tobin in the Seventies. Two years ago, the European Commission had explored the use of a Tobin Tax for transactions in the EU however member states, chiefly Britain, had reacted against this proposal.