The Lithuanian government’s hint at temporarily imposing an additional tax on banks’ profits soaring on the back of rising interest rates is a welcome step, a presidential adviser said on Tuesday.
“Encouraging socially responsible behaviour in the financial sector, all of its participants, with a focus on a greater balance is certainly welcome,” Irena Segalovičienė, chief economic and social policy adviser to President Gitanas Nausėda, told the Žinių Radijas radio station.
The so-called solidarity tax would even out the imbalances due to which interest rates on bank deposits are rising more slowly than those on loans, she said.
The adviser also welcomed the Finance Ministry’s proposal to use the proceeds from the tax for defence.
The Bank of Lithuania said on Monday that commercial banks operating in the country enjoyed excessive profits last year, up by as much as 67 percent. Without additional taxes, 2023 profits could hit 1 billion euros, more than three times the margin of “normal” years, the central bank’s chief Gediminas Šimkus said.
Read more: As Lithuania’s banks enjoy windfall profits, government considers corrective taxes
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