Investment funds and their investors, including people saving for retirement, should be excluded from a financial transactions tax (FTT), the German Association of Investment and Asset Management (BVI) said.

While the BVI believes perpetrators of the financial crisis should contribute a fair share to finance the consequences, it said German funds were neither responsible for the crisis nor the recipients of government support.

CEO of the BVI Thomas Richter said: “The tax would mainly affect companies and investors based in Germany as well as long term saving citizens who, due to demographic developments, are dependent on private pension plans.”

An FTT would hit all funds, but it would be particularly counter-productive on Riester funds with a legally predefined capital preservation of paid contributions. Riester funds are government grant-aided privately-funded pension schemes. For these funds the share of stocks and bonds needs to be constantly adjusted to the market situation. Long-term Riester-fund savers who are saving for retirement would be taxed up to €14,000.

Also, mere inflows or outflows in the fund would trigger the tax. The BVI therefore doubts the FTT would develop the desired steering effect of preventing risky and unproductive trades, rather it would simply make financial services more expensive for consumers.

Share Story: