📋 Written Ability Test (WAT)/Essay Analysis Guide: Should Governments Impose a Tax on Financial Transactions to Reduce Speculation?
🌍 Understanding FTT’s Importance
💡 Financial Transaction Tax (FTT) addresses speculative volatility, enhances fiscal revenues, and reflects broader questions of market regulation and equitable taxation. Its implications touch finance, economics, and policymaking, making it a crucial topic for B-school candidates.
🕒 Effective Planning and Writing
- ⏱️ Time Allocation: Planning (5 min), Writing (20 min), Review (5 min).
- 💡 Preparation Tips:
- 📊 Highlight real-world examples like the UK’s stamp duty and Sweden’s FTT experiment.
📝 Introduction Techniques for Essays
- 🔄 Contrast Approach: “While financial markets fuel economic growth, speculative trading contributes to instability, making a case for taxation.”
- 💡 Solution-Based Approach: “To curb excessive market speculation, governments increasingly turn to financial transaction taxes, balancing revenue needs and stability.”
📋 Structuring the Essay Body
- 🏆 Achievements: Highlight revenue potential (e.g., France’s €1.5 billion FTT) and stability benefits.
- ⚠️ Challenges with Comparative Analysis: Discuss liquidity issues and migration to untaxed markets, citing Sweden and India.
- 🚀 Future Outlook: Propose global coordination and technological innovations for tax enforcement.
🎯 Concluding Effectively
- ⚖️ Balanced Perspective: “FTT can stabilize markets if designed to minimize negative impacts on liquidity and retail participation.”
- 🌍 Global Comparison: “Lessons from the UK and Sweden underline the importance of a balanced FTT policy tailored to national contexts.”
🔍 Analyzing Successes and Shortcomings
- 🏅 Key Achievements: Revenue generation, reduced speculative trading.
- ⚠️ Ongoing Challenges: Capital migration, impact on market dynamics.
- 🌐 Global Context: Mixed outcomes globally highlight the need for cautious implementation.
💡 Recommendations for Sustainable Progress
- 📈 Phased Implementation: Gradually increase tax rates to assess impact.
- 📊 Retail Exemptions: Protect small investors from undue burden.
- 🌐 Global Cooperation: Prevent tax arbitrage and ensure equitable revenue distribution.
📄 Sample Short Essays
- ⚖️ Balanced Perspective: “While FTT promises market stability, its design must balance revenue goals with liquidity needs, learning from global experiences.”
- ✨ Solution-Oriented: “A globally coordinated FTT can curb harmful speculation while funding critical social programs.”
- 🌐 Global Comparison: “From the UK’s stable stamp duty to Sweden’s failed experiment, FTT showcases the critical role of thoughtful policy design.”