With the exception of spot transactions, these instruments are known as 'derivatives' because their value is derived from the value of an underlying asset which is not bought or sold in the transaction. Tourists exchanging dollars to pay for their holidays abroad would not be subject to a Tobin Tax. Debate continues as to whether the tax should apply to any transaction less than a million dollars. The tax would target only speculative currency transactions. Because it is not easy to determine which types of transactions are speculative and which are associated with legitimate trade in goods and services, the tax hinges on the speed of a transaction.
Speed is the primary difference between speculative and legitimate trade.
However, this has never dissuaded governments from collecting taxes, particularly 'sin taxes' designed to stem unacceptable behavior. A Tobin Tax could be difficult to evade. Because currency transactions are tracked electronically, in theory the tax would be easy to collect through the computer systems that record each trade. While the amount of money is enormous, the number of centres where trading occurs and the number of traders is not. Eighty per cent of foreign-exchange trading takes place in just seven cities.