Revenues from a financial transaction tax could help fund state pension benefits of up to 1.5 million retirees in Germany starting in 2021 under the proposal from German Finance Minister Olaf Scholz.
According to the ministry’s website, Mr. Scholz has proposed a financial transaction tax directive to the ministers of the eurozone — Austria, Belgium, France, Greece, Italy, Portugal, Slovakia, Slovenia and Spain — to gain support at a European Union level.
Under the proposal, an 0.2% tax would be charged to all investors purchasing ordinary as well as preference shares issued domestically by listed companies. Currently, financial services are not subject to the value-added tax in Germany, unlike goods and other services.
The tax would relate to equity securities issued in Europe only. Buyers of company stock with at least €1 billion ($1.1 billion) capitalization as well as buyers of domestically and internationally listed depository receipts backed by the companies would fall under the scope of the tax. Derivative transactions as well as redemptions or conversion of debt securities would also be subject to the FTT, the proposal said.
A pan-European financial transaction tax legislation was first discussed in 2011. But due to a lack of agreement among EU states — the countries from which Mr. Scholz is now seeking support — nothing was ever formulated.
In November, the German coalition government reached an agreement on the tax domestically, which in Germany alone is estimated to yield about €1.5 billion for the additional financing of the state pension fund, similar to Social Security in the U.S.
“We have made good progress on the financial transaction tax in recent weeks,” Mr. Scholz said in a news release.
Mr. Scholz’s effort has been boosted by France, where a transaction tax already exists and Finance Minister Bruno Le Maire is seeking to bring back plans to introduce it as pan-European legislation. The European Commission originally planned to implement tax in 2014.