Proposed transaction tax to hit Danes’ pension pots by €13,000

Proposals being floated in Denmark to impose a version of the EU’s financial transactions tax could cost blue-collar workers’ pension pots DKK100,000 (€13,400), according to the Danish Centre for Political Studies (CEPOS).

The tax – which would require financial institutions to pay 0.1% of the value of shares or bonds they buy or sell – is gaining support among Danish political figures ahead of the country’s next general election, scheduled for 5 June.

Mette Frederiksen, leader of the Social Democrats, has voiced support for the tax proposal, as have politicians from the Socialist People’s Party, the Red-Green Alliance and the Alternative Party.

The opposition Social Democrats have been tipped to win next month’s election. However, the surprise win in the EU parliamentary elections at the weekend for prime minister Lars Lokke Rasmussen’s Liberal Party has sparked renewed speculation over the likely result.

Mads Lundby Hansen, chief economist at the Danish free-market think tank CEPOS, warned against the tax proposal: “It will damage the savings if the pension return tax is raised again. And that will erode the Danes’ pension payments.”

He also said that tax would mean an increase of 1.7 percentage points on the current pension return tax. Danes already faced pension taxes of 15.3%, Lundby Hansen added, the second highest of all OECD countries.

According to a report from Danish news service Berlingske Business, the Social Liberal Party (Det Radikale Venstre) had changed its position on the tax and no longer required it tax to be implemented at an international level. 

Martin Lidegaard, finance spokesperson for the Social Liberal Party, told Berlingske Business: “Now we are ready to see if it can happen at a European level. We have moved away from it having to be international, towards also supporting it in a European solution, if that can be created.” 

German news magazine Der Spiegel also reported on Friday that German finance minister Olaf Scholz wanted to introduce the tax in Germany even if other EU countries did not come to an agreement. 

The EU financial transaction tax was initially proposed in 2010 by the European Commission to be introduced in some member states. EU members have been split on the financial transaction tax concept for years.