Czech Prime Minister will propose a special tax on banks
The Czech Republic’s ruling centre-left Social Democratic Party will propose a special tax on banks to help fund schools and infrastructure and keep profits from leaving the country as part of its manifesto for elections in October.
The plan was revealed on Tuesday by Prime Minister Bohuslav Sobotka, whose Social Democratic Party trails coalition partner the ANO movement of Finance Minister Andrej Babis by a large margin in the polls. ANO opposes a bank tax.
The country’s banking association had no immediate comment, while Babis said he worried such a tax would impact banks’ customers, making loans for people and firms more expensive.
A tax on the Czech Republic’s mainly foreign owned banks, which would be on top of the 19 percent general corporate tax rate, could add 11 billion crowns ($433 million) into the state budget each year, the Social Democrats estimate.
They argue such taxes already exist in 15 other European Union countries, including the Czech Republic’s immediate neighbours.
If applied to total assets, the new levy could roughly double the corporate tax paid last year by banks in the Czech Republic and make a significant dent in their profit.
“We cannot close our eyes to the fact that in recent years more than half of (bank) profits have flowed abroad… We want to change that,” Sobotka said.
The biggest banks in the country are owned by Belgium’s KBC , Erste Group Bank of Austria and France’s Societe Generale .
Moneta is the biggest listed bank without a majority foreign owner.
The Social Democrats said the proposed bank tax would carry four rates, depending on the size of assets. The top rate would be 0.3 percent of assets for those with assets of more than 300 billion crowns ($11.8 billion).
Shares in Komercni lost 0.9 percent after the news, and Moneta was down 2.4 percent at 1140 GMT, among the biggest losers in the PX index, which shed 0.6 percent.
Komercni had assets of 923 billion crowns at the end of last year and a 0.3 percent charge would cost it 2.8 billion crowns ($110 million), out of a net profit of 13.7 billion.
Erste’s Sporitelna and KBC’s CSOB would pay more than 3 billion crowns each on last year’s assets. Moneta, with a balance sheet of 150 billion, would be liable for about 300 million crowns.
The Czech Republic’s budget recorded its first surplus in two decades in 2016, as revived economic growth boosted revenue. ($1 = 25.4250 Czech crowns)
Source: Daily Mail
