Denmark to Make Banks, the Rich Fund Its Early Retirement Plan

(Bloomberg) -- Denmark’s Social Democrat-led government drew the ire of the country’s financial industry by unveiling 3 billion kroner ($480 million) worth of additional taxes to fund early retirement for certain categories of workers.

The government’s plan includes a targeted corporate tax on banks and pension funds and higher levies for the most wealthy investors on their stock market returns, Prime Minister Mette Frederiksen told reporters Tuesday.

The new levies, which are due to come into force in 2023, will now need to be approved by parliament.

The idea of granting the right to early retirement for citizens who carried out particularly arduous lines of work was one of the main election campaign promises of Frederiksen’s Social Democrats. The prime minister hopes to capitalize on her high approval ratings following a relatively successful containment of the coronavirus pandemic.

“I can’t imagine that this won’t get a majority in parliament,” Frederiksen said at a press conference held in a slaughterhouse in Horsens, in western Denmark.

Some 38,000 workers are expected to take up the early retirement option, according to government calculations.

Denmark’s financial industry, which faces annual levies of 1.5 billion kroner, has pushed back against the proposals.

“The politicians cannot implement such a big tax on the financial industry and not expect us to pass the bill on to customers,” said Birger Krogh Nielsen, chief financial officer at Jyske Bank A/S.

The country’s bankers association said its members were being asked to finance political reforms that have little to do with the industry.

What’s more, the plan “makes it more difficult for the financial industry to support growth and employment,” said Ulrik Nodgaard, head of Finans Danmark.

Read more: Danish Banks Warned Against Passing Tax to Clients Amid Scandals

Here is a breakdown of the proposal:

• Notional gain tax on business property investments (DKK 850 million)
• Higher tax on stock market returns (DKK 650 million by 2025)
• Cap on tax deductions on salaries above DKK 10 million (DKK 100 million)
• Special corporate tax on the financial industry (DKK 1.5 billion)

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