Warning of stock exchange transaction tax

The German share institute wrote a letter to Finance Minister Scholz. It warns of a stock exchange transaction tax, which it sees primarily as disadvantages for retirement provision.

Stockbrokers are worried about the plans for a transaction tax.

Dhe plans of Olaf Scholz with regard to the taxation of investments have met with criticism in many places. Now the Deutsche Aktieninstitut (DAI), representing the interests of capital market-oriented companies, banks, stock exchanges and investors, has sent a letter to the Federal Minister of Finance to warn of the negative consequences of the planned share tax for the German economy and society. The tax should not be pursued either at European level or on its own.

“We are concerned about the plans of the Federal Minister of Finance to introduce a share tax,” emphasizes DAI President Hans-Ulrich Engel. The DAI is particularly worried about three negative effects: pension provision with shares is made more difficult, employee share programs are made more expensive and the provision of capital via the stock exchange is jeopardized. “Savers, small investors and employee shareholders are asked to pay, and corporate financing via the stock exchange is becoming less attractive. It is poison for Germany as a financial center, ”warns Engel.

Worry about retirement plans

The share tax has a negative impact not only on the roughly ten million shareholders in Germany, but also on the possibility of using shares to make the German pension system future-proof. Due to demographic change, Germany must increasingly rely on shares in old-age provision in order to relieve the younger generations. A stock tax would be counterproductive.

Employees could, in turn, share in the success of the German economy with employee shares. If employee share programs were made more expensive by the tax, their dissemination would be made more difficult. Exactly the opposite is in the interests of asset accumulation and pension provision for employees.

The tax would also have negative effects on corporate financing via the stock exchange. In order to survive in international competition and, above all, to cope with the challenges of digitization, companies need access to capital and an IPO is the method of choice. Efforts at the European level to strengthen financing via the stock exchange throughout Europe within the framework of the “Capital Markets Union” would also be counteracted by a share tax.

Germany is already lagging behind almost all other developed countries in IPOs. So far this year there has not been a single IPO in Germany and only 18 in 2018. On the six-country exchange Euronext there were 29 so far this year and 50 in the previous year Companies that dared to step on the floor.

“We need better access to capital, because this is the only way to master the challenges that lie ahead and secure growth, innovation and employment in Germany. A share tax points in the completely wrong direction, ”warns Engel.

German taxes for Slovakia and Slovenia

The plan for a financial transaction tax has been pursued at EU level since 2009. This should help the financial sector share in the costs of the financial crisis, contain speculation and generate high tax revenues. Since most EU member states reject the introduction of such a tax, the project is currently only being pursued by ten member states within the framework of so-called enhanced cooperation, including Germany and France. Countries such as Slovenia and Slovakia, which, due to the lack of large listed companies, would not generate their own income from a share tax, are also to contribute to the hoped-for EU total tax revenue of 3.5 billion.

This cross-subsidization is necessary because the enhanced cooperation is tied to a quorum of nine countries. If Slovenia and Slovakia jump off, the financial transaction tax can no longer be pursued at European level.