The President of the Government, Pedro Sanchezannounced last Tuesday, July 12, during his first speech at the State of the Nation Debate the creation of a new temporary tax on the banking sector, among other measures. This would be a new temporary tax that will last for two years and will apply to the banking years of this 2022 and the next 2023, something similar to the new tax on energy companies, which Sánchez also announced. With the imposition of this rate on the banks, La Moncloa expects to raise around 1,500 million approximately euros.
According to Sánchez himself, the application of this tax is linked to the evolution of bank capitalization “in the last year, especially in recent months, really extraordinary”. Following these statements, the IBEX35 closed the July 12 trading day positive, but the figure was increased by the negative values of the banking sectorwith falls of 8.63% from CaixaBank, among others.
In line with ECB interest rate hike
For his part, the The European Central Bank (ECB) announced earlier this month that it was studying ways to prevent banks from making windfall profits. through the loan program activated by the entity during the pandemic. In this sense, as detailed in the FinancialTimesthe entity will announce at the end of this month an increase in the interest rates of these loans by which, among other things, banking entities in Europe are financed.
In response to the crisis caused by the pandemic, the At the end of 2020, the ECB agreed, among other measures, to keep the sector’s interest rates unchanged at 0.00%, 0.25% and 0.50%. Via a press releasethe agency clarified that these would remain at these levels until “the outlook for inflation is sufficiently robust”. According Bloombergthe ECB granted 2.2 trillion euros through these subsidized loans to banks to avoid a credit crisis caused by the COVID-19 pandemic.
A difficult tax base to balance, according to experts
According to the experts consulted by Maldita.esso-called providential benefits (extraordinary benefits received by a certain economic sector in an exceptional situation) come from profits made during this period when ECB interest rates were exceptionally low. The director of the Master in Financial Instruments and Markets at the Universitat Oberta de Catalunya, Elisabet Ruiz Dotras, explains that the banks, together with these low interest rates, have obtained their advantages thanks to the loans they grant to citizens, for example, 5% or 6%.
Mario Sánchez-Herrero, professor of economics at the Complutense University of Madrid, points out that the ECB’s announcement to raise interest rates for banks is a return to normality, since the logic is that “the ‘money costs’ and enjoys ‘normal tax treatment’. “If the ECB’s interest rates increase, the banks have more reason to increase them themselves in the loans they grant or in the fees, so you can’t really talk about profits from the sky”, explains Sanchez-Herrero. The expert also points out the possible difficulty of setting the “base” of this tax by the Government. “It’s going to be difficult to determine whether this will have an impact on increasing costs for customers, via higher interest rates or commissions, or whether they will apply it to their own profits.”
For his part, the spokesperson for the Spanish Banking Association (AEB)José Luis Martínez, indicates a Maldita.es What the sector “was not informed despite maintaining a constant dialogue” with the Executive and reflects legal improvisation in its application. “Any increase in interest rates by the ECB does not necessarily ensure an improvement in bank profitability, nor does it translate into extraordinary profits, but rather responds to rising inflation and may lead to lower economic activity”, explains Luis Martinez. However, they acknowledge that “negative interest rates for many years” have been “something extraordinary”.
Hungary already applies a similar tax
Last May, the Hungarian government announced the application of a new tax on windfall profits to banks and companies in the country. According to the portal Euroactiv, The Budapest executive plans to raise a total of 2,180 million euros and it will be applied, as in Spain, in the exercises of this 2022 and the next 2023. “We will force banks, insurers, large retail chains, the energy industry and commercial enterprises, telecommunications companies and airlines to pour a large part of their additional profits into two-state funds. “, Orban said in his announcement. .
According to US financial analyst S&P Global, through a report published on July 12, the profits that the Hungarian government will obtain from this levy will be equivalent to 37% of the net profits of its banking sector. To this would be added 11% of your net interest and commission income. In this sense, the banking sector will be the second largest contributor to the exceptional tax after the energy sector, information you have already explained Maldita.es. According Reuterslast June, Italian lawmakers reportedly pressured the Italian government to apply a tax similar to the model outlined by the Spanish government, but only to financial entities that trade in gas, electricity or oil.