Pensionskassen doubt regulatory value of Tobin tax
AUSTRIA - Austria's government and trade unions are pushing for the introduction of an EU Tobin tax on financial transactions, but the country's pension funds doubt that it will have the desired regulatory effect.
A Tobin tax, which could include all financial transactions such as the sale and purchase of bonds, equities and derivates, was debated at the G20 summit at the end of September.
The Tobin tax concept is modelled on the suggestion of a minimal tax to be levied on currency transactions between countries, which was first proposed in the 1970s.
After a meeting of Austrian union and industry representatives, both sides noted yesterday that they supported the Austrian government in demanding the introduction of a financial transaction tax in the whole of the EU "to increase transparency and reduce quick, short-term speculations", according to a statement.
However, Günther Schiendl, board member and CIO of Austria's largest Pensionskasse VBV, told IPE that there might be more efficient ways to keep high-risk speculations in check: "Certain amendments to the financial system are already under way," he noted.
These include proposals to regulate derivatives trading through central counterparty clearing platforms or exchanges, and limitations for ETFs regarding commodity derivatives.
Schiendl also warned that changes should not be made not to take such steps simply on account of the financial crisis. "Introducing a tax on financial transactions would only make sense if it was coordinated globally - otherwise it will only create distortions and new tax havens," said Schiendl.
He says that "fine-tuning" existing regulations, like the margins on derivative holdings, and re-calibrating risk models after the crisis, could be sufficient.
Georg Daurer, a board member at Bonus Pensionskasse, said such a tax would "harm Europe's position as a financial trading place".
As for Pensionskassen, Daurer said it was unclear whether long-term investors might be exempt from such a tax, which could also proof difficult as often such tax exemptions have to be paid and then reclaimed.
He stressed that its introduction would lead to lower returns for Pensionskassen and in turn their members.
Indeed, Austrian chancellor Werner Faymann had noted in his statement on the tax that he did not want any new taxes that affected a large proportion of the population. Applying any new tax to Pensionskassen would indirectly do just that.
However, Fayman pointed out that the new tax was aimed at "taking a burden off the real economy in times of crisis and placing it on financial products".
The economic committee of the Austrian social partners calculated that even a 0.01% tax on all financial transactions within the EU would create an income amounting to two-thirds of the EU budget.