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Slovak Banking Association attacks bank tax as 'short-sighted'

The Slovak Banking Association (SBA) has said it believes that the proposal to levy a new tax on selected liabilities of banks is a short-sighted step that could have a negative impact on the banking sector and its clients. Moreover, they warn that if the proposal is translated into law, the resulting tax would be the highest in the European Union, the TASR reported on Tuesday, October 18.

The Slovak Banking Association (SBA) has said it believes that the proposal to levy a new tax on selected liabilities of banks is a short-sighted step that could have a negative impact on the banking sector and its clients. Moreover, they warn that if the proposal is translated into law, the resulting tax would be the highest in the European Union, the TASR reported on Tuesday, October 18.

The SBA is most afraid that parliament will approve a proposal by opposition party Smer to set such a tax at 0.7 percent. Smer says that the bank tax proposal, which is currently being tabled by the Finance Ministry, was originally its idea.

“As banks may not be able to create enough profits and thereby the extra capital needed for the impending economic difficulties, the higher bank levy rate could lead to the destabilisation of the banking sector,” SBA chair Igor Vida said, as quoted by TASR, adding that this destabilisation would be increased if companies transferred their deposits to countries with lower bank levies.

The SBA is proposing that the bank levy rate should be set by the National Bank of Slovakia (NBS), the country’s central bank, and the Finance Ministry in order to reduce the negative impact on the banking sector and clients of financial institutions.

One possible alternative to a bank levy could be an increase in VAT, Vida said, arguing that it is a fairer tool that applies to everyone in accordance with how much they consume.

“The Finance Ministry came up with a 0.2-percent bank levy that was later increased to twice as much by a consensus reached among all the coalition parties,” said Finance Ministry spokesperson Martin Jaroš, as quoted by TASR. “The matter is now in the hands of MPs.”

Parliament is due to discuss the legislation on Wednesday, October 19, in a fast-tracked legislative procedure.

Source: TASR

Compiled by Radka Minarechová from press reports
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