News

2019.10.02 10:00

Ruling party calls out ‘blackmail’ as Lithuania's banking association opposes bank asset tax

BNS 2019.10.02 10:00

The Lithuanian Farmers and Greens Union's leader has described as "blackmail" a statement by the Association of Lithuanian Banks (LBA) that a tax on banking assets would make loans for households and businesses more expensive and would hurt the economy.

Karbauskis said the association's claims had "nothing to do with reality" and called its estimates on a hike in bank service prices "a clear lie".

"This is blackmailing the public in a not too honest way," he said.

Head of the ruling party said he will contact the owners of two Swedish banks with operations in Lithuania, SEB and Swedbank, to find out if such statements "have anything to do" with their position.

"I think this is primarily a statement by people who work at banks, rather than by the owners. I don't think banks' owners think so," he told reporters on Tuesday.

Members of the Electoral Action of Poles in Lithuania–Christian Families Alliance (LLRA-KŠS) party have drafted a bill for a 0.4-percent annual tax on commercial bank assets, which according to them, would help raise 100 million euros to be spent on fighting poverty and income inequality.

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.

However, "the Finance Ministry's estimate is around 40 million euros," Karbaukis told the Žinių Radijas radio station.

Karbauskis dismissed a warning by the Association of Lithuanian Banks (LBA) that a tax on banking assets would lead to a hike in interest rates on loans.

"This is absurd; we don't live in some kind of closed vessel. All countries are interconnected, and the banking sector cannot charge interest three times as high as in Germany or elsewhere,” he said.

According to Karbauskis, Lithuania has one of the lowest tax collection rates in the EU and has to look for ways to collect more taxes.

According to LBA, a preliminary impact analysis shows that the proposed tax may drive up prices for banking services by 8 percent, or around 60 euro cents per customer monthly.

Read more: Lithuanian banks hit back against proposed tax on their assets

Meanwhile, adviser to Lithuanian President Gitanas Nausėda says a tax on banking assets may discourage new banks from entering the Lithuanian market.

"Our proposals so far have been toward converging the taxation of different types of activities and reducing various exemptions. Therefore, we are cautious about singling out one branch of the economy in terms of taxes," the advisor told BNS.

"We cannot boast of an excess of banks in Lithuania," he said.