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Lithuania's ruling coalition is ready to support a move to tax banking assets, Ramunas Karbauskis, the leader of the Farmers and Greens Union, the biggest party in the parliament, has said.
Ramūnas Karbauskis
Ramūnas Karbauskis
© DELFI / Kiril Čachovskij

Mantas Zalatorius, the president of the Lithuanian Banks' Association (LBA), warns that such a hasty introduction of a new tax will harm the economy as a whole.

"We have had discussions with the government; I have spoken both to the finance minister and to the prime minister. This proposal will be approved," Karbauskis told LRT TV on Monday.

"That tax is the most effective in that it has the least impact on socially unprotected people," he said. "Those who have (bank) accounts, savings and so on may be affected most of all."

The proposal to tax banking assets has been tabled by the Electoral Action of Poles in Lithuania–Christian Families Alliance. Its leader, Valdemar Tomasevski, says the issue of taxing banks additionally must be dealt with "very urgently".

"One of the sources (of extra budget revenue) is to tax bank assets. It is a lot of money; it could bring around 100 million euros into the budget," Tomasevski said.

"We have drafted and registered such a bill and we expect it to be passed. I believe the opposition should also back the proposal, because banks are a structure that earns the most money but pays very little in taxes," he added.

Zalatorius noted that the ruling parties are planning to impose the new tax in a hurry, without holding discussions and carrying out a cost-benefit analysis.

"We are convinced that a thorough and in-depth analysis and professional discussion is necessary, because such a tax may do more harm than good for the Lithuanian economy," he said.

According to Zalatorius, preliminary estimates and the experience of some foreign countries, such as Hungary, suggest that such a tax could slow down economic growth and lead to higher unemployment.

The LBA president said now is a bad time to impose a new banking tax, given the increasing talk of a global economic downturn or stagnation, Germany's worsening economic situation and growing uncertainty over Brexit scenarios.

Back in March 2016, the Electoral Action of Poles in Lithuania–Christian Families Alliance registered draft amendments that call for taxing financial institutions' assets worth over 100 million euros and insurance companies' assets worth over 50 million euros at a monthly rate of 0.0334 percent or an annual rate of 0.4 percent.

The initiators of the amendments say some European countries, such as Britain, Hungary, Portugal, France and Sweden, have similar taxes on banks and financial institutions.

BNS
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