Insurance and Pension Denmark (IPD) is criticising government plans for the new financial sector tax, saying that according to a rough draft proposal the levy would be much heavier than needed to finance the 2020 early-retirement pension reform.
The pensions and insurance lobby group said in a statement on Friday that the introduction of digital cash registers – technology which can improve tax compliance – should be pushed forward in Denmark, so the early-retirement pension could be financed to a much greater extent with income from the fight against VAT and tax fraud.
A year ago, Denmark’s Social Democrat government reached agreement with other parties to introduce a right to early retirement for people who had spent a long time in the labour market, particularly those with physically and mentally demanding jobs.
The new pension right, dubbed the “Arne pension”, was to be paid for with proceeds of a new financial sector tax.
Kent Damsgaard, IPD’s chief executive officer, said: “The draft law for the special tax proposes sending a huge extra bill to the Danish insurance and pension companies and thus all their customers.”
He added that the latest proposal could extract as much as 1.5 times the revenue needed from companies, and would push financial business out of Denmark because it would become less attractive to do business in the Nordic country.
IPD was responding to a report in news service FinansWatch of a proposal from the Tax Ministry which included details of the financing of the Arne pension, according to a spokesman from the industry association, who confirmed the proposal was not a public one.
Damsgaard urged the country’s politicians and authorities to “look critically” at the additional corporation tax and its implementation, and to find alternative financing.
“To collect DKK2bn (€270m), in order to end up with revenue of DKK1.25bn is simply not fair to the Danish insurance and pension customers,” Damsgaard said.
IPD said the agreement on the special financial sector tax stated that proceeds from the introduction of digital cash registers, planned for 2024 to target VAT and tax evasion, would be used to reduce the financial sector’s contribution to the Arne pension.
“So let’s roll out the digital cash registers faster and wider to all those industries where there are demonstrably big problems with tax and VAT fraud – and use the money from there to finance the early retirement scheme instead of sending extra bills to insurance companies, and pension customers,” Damsgaard said.