Bank Tax Divides Leading Economists

The bank tax has divided leading domestic economists after it was announced that the government could take 1.9 billion kuna from banks.

Experts warn that it is not negligible that the state has many loans with those same banks. In the case of a bank tax, there is a high probability that future state borrowings will significantly increase interest rates and installments on new loans, which they say we will inevitably need. We pay them from the same state budget that we intend to patch with the bank tax. Furthermore, if the conditions of doing business in one country become more expensive for them, what prevents banks, which are mostly foreign-owned, from transferring money to another, cheaper country for business? On the other hand, those who support the announced tax claim that the government has little room to save the state budget.

The SDP opposes the introduction of a tax on banks. The party president Zoran Milanović assessed that this would be a short-term, premature, and harmful measure. Emphasizing that he does not advocate for the interests of banks, but for Croatian interests and common sense, Milanović warns that such a decision would only serve to patch the budget hole and the growing deficit after the crisis tax is abolished. Reminding that the SDP submitted a law on taxing interest rates above 9 percent to parliamentary procedure a year and a half ago, which did not pass, the SDP president emphasizes that the government can tax those who earn additional profits, but it does not want to do so. He called on Prime Minister Kosor to publicly express her opinion on such a move.

The president of the HSS, Josip Friščić, is one of the advocates for introducing a tax on banks. He pointed out that citizens, pensioners, and employees have so far contributed to solving the crisis, and equally, those who have had good profits and done well during this time should contribute as well. I know that it is easiest for them, that the government, the state, or Šuker is the best customer; the bigger the hole in the budget, the more claims there will be. However, in this way, we will not solve the problem of financing all public needs, nor achieve budget stability, he added. He also stated that the HSS will support whatever the majority decides – they will not be the ones to obstruct. The introduction of any new tax is a burden on the economy, said Sandra Švaljek, a member of the Prime Minister’s advisory team for economic and business issues, today. When asked how she sees a solution for strained state finances, Švaljek said that economists have given the Prime Minister their best advice, but politicians should be left to discuss it in peace.

Economist Ljubo Jurčić believes that the debate about the bank tax is unnecessary: – Banks produce money; they know how to account for it and how to avoid tax obligations. This is more of a populist measure that solves nothing. They may introduce this tax, and we will continue to fall. The government’s economic recovery program aims to reduce costs, which is good, but not enough. What we will do, how we will live, and how we will repay loans is lacking. (www.hrt.hr, www.vecernji.hr)