This is, in fact, the feature of Spahn's proposed variable surcharge that could make it effective in altering market behavior. But at the same time, in the absence of volatility, the additional uncertainty it would create in financial markets is likely to impair their operation and increase spreads. Variable-rate taxes are also rarely used because they complicate considerably the burdens on taxpayers and tax administrations. This effect would be particularly severe in the case of a two-tier Tobin tax because the number of separate transactions to which the tax would apply is so huge. A second issue is the advisability of mixing monetary policy with tax policy, given the different constraints under which each operates.
Monetary policy can change quickly and is generally somewhat insulated from politics.
Tax policy changes only infrequently and political considerations are generally paramount. Spahn does not address either of these two issues, though they are crucial to assessing his proposal. Effect on market volatility and efficiency. Since Tobin taxes do not exist in practice, there is little empirical evidence to suggest that such taxes would be effective in reducing currency fluctuations, as Spahn asserts. Countries have used various forms of capital controls to reduce currency fluctuations, including implicit taxes such as nonremunerated deposits in the central bank.