Tobin tax opposed in Germany

German firms have joined opposition to the introduction of a tax on financial transactions in Europe, warning of severe damage to businesses in the euro zone’s largest economy.

Blue-chip companies, including Bayer and Siemens, said they faced tens of millions of euros in costs from the tax and complained of burdens such as lower returns on the pension schemes they run for employees.

Their criticism adds to concerns over the European Commission’s plans to implement the so-called Tobin tax (suggested by Nobel Prize-winning economist James Tobin) across 11 euro zone countries, including Germany, in an attempt to curb speculative trading by banks and other market participants in the wake of the financial crisis.

Industrial opposition
Although chancellor Angela Merkel and other German politicians have championed the tax, opposition from the industrial companies that are the motor of the country's economy may reduce enthusiasm.

The levy is “a direct strike against the export-oriented German economy”, said Christine Bortenlänger, chief executive of the Deutsches Aktieninstitut (DAI), an organisation representing German-listed companies and investors.

The debate comes after Jens Weidmann, president of the Bundesbank, Germany's central bank, spoke out last month over potential side-effects from the financial transaction tax. It would levy 0.1 per cent on stock and bond trades and 0.01 per cent on derivative deals.

Rift with Brussels
Banks and other financial companies are against the tax, which has also widened a rift between Brussels and the British government.

The UK wants to protect its financial sector and has threatened a legal challenge over how the tax might apply to UK trading in securities from countries signed up to the FTT. Both the UK and the Republic have opted out of levying the tax.

Yesterday, the DAI said the tax would have an “enormously broad impact” on companies, for example through their use of derivatives to hedge exchange rate risks when they export.

A study of 24 large German companies estimated they faced costs of between €600 million and €1.5 billion from the tax, the DAI said. “Politicians obviously don’t realise what damage the FTT would cause for companies in the real economy,” Ms Bortenlänger said.

Georg Geberth, director of global tax policy at Siemens, said the industrial company faced a possible annual cost of €70 million-€100 million from an FTT, through the company’s hedging as well as through trading of securities for group pensions. – Copyright The Financial Times Limited 2013