Consider the following statements with reference to Tobin Tax 1 It discourages short term currency s...........

Economic Affairs Tax System

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Consider the following statements with reference to Tobin Tax:

1.It discourages short term currency speculations.

2.It can ensure stability of foreign portfolio investments.

3.There is no such similar tax in India till date.

How many of the statements given above are correct?

Only One

Only Two

All Three

None

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Explanation:

It discourages short-term currency speculations: This statement is correct. Tobin Tax, also known as a currency transaction tax, was proposed by economist James Tobin to discourage short-term currency speculation. The tax aims to make short-term financial transactions less attractive, thereby promoting more stable financial markets.

It can ensure the stability of foreign portfolio investments: This statement is correct. By discouraging short-term speculation, Tobin Tax is intended to reduce volatility in financial markets and contribute to the stability of foreign portfolio investments.

There is no such similar tax in India till date: This statement is incorrect. India does not have a Tobin Tax specifically, but it has implemented other measures related to taxation and regulation of financial transactions.