Bank customers will foot bill for new bank tax

 In Banks, Business, News

A former secretary of State has warned that a new bank tax imposed by the Government will likely be passed on in bank charges to their customers.

In an interview with Dinheiro Vivo, Sérgio Vasques, a former tax minister, says that the Social Tax on the banking sector could prove extremely complex and its cost could end up being taken out of the pockets of bank customers in charges.
Vasques says that regardless of the merits of the policy and the goodwill underpinning the measure, the solution from a technical point of view is hugely complex given that the banks in Portugal have to pay four different tax contributions such as the 2010 tax created when he himself was the minister for fiscal affairs.
“When we launched a special contributions bank tax in 2010, we did so within the context of the situation that the country was going through,” he said referring to a €78Bn IMF/EC/ECB bailout, explaining that there had been a perception at an European level that the banking sector “should contribute to insuring against systemic risk,” with the idea of a new European tax on financial transactions.
The tax law specialist warns that the complexity of the different taxes on the banks could get even worse if the European transaction tax, which has been in development since 2011, ever goes ahead.
An outline proposal had been presented by the European Commission which ended up being kicked into the long grass because of resistance from various Member States.
So the Portuguese Government’s proposal now is to create a supplementary solidarity tax on the banking sector of 0.02% points with revenues going to the Social Security Financial Stabilisation Fund which expects to rake in around €33 million from the measure.
The new tax has been roundly criticised by the banking sector which says it will “purely and simply punish the banks” although the Government says it will exempt the banks from paying applicable VAT on some financial services and operations.
But in a study on the Supplementary State Budget 2020, MPs have been warned that the banks will simply increase bank charges to offset the new tax.
“Any tax will tend to be clawed back by financial entities and companies passing the charge on to their respective customers and this risk exists” says Sérgio Vasques.