José Luis Escrivá has given his first interview as the new governor of the Bank of Spain to the economic newspaper ‘Expansión’. From that media speaker (the leader of the ‘salmon paper’), he has taken the opportunity to wink at financial entities by asking that the banking tax be changed and “make it neutral.”
Neither the platform nor the moment of this statement are trivial. The governor has marked his position in the midst of the negotiation of the 2025 General State Budgets (PGE) between the Government and its partners. Some conversations that include the definitive design of the until now “temporary tax”, because the Executive promised to convert it into a permanent tax in the coalition agreement between PSOE and Sumar.
“I have always thought that central banks must be very restrained when talking about taxes, because they have redistributive effects and these elements belong to the sphere of democratic decision-making. In that sense, we have the utmost respect for what the democratically elected bodies decide regarding taxes,” says Escrivá, on the issue of the banking tax.
“That said, our contribution to this debate can focus on design. It would seem desirable to us to change the design of the banking tax with respect to its current formulation, which does not discount provisions and that poses problems in at least two areas. On the one hand, there are banking activities that have more risk, for example, lending to SMEs, but which also have more provisions. To the extent that you do not deduct provisions from the tax base, you may be penalizing in relative terms a banking activity on which taxation should be neutral. As financial entities usually have to make greater provisions during the lowest part of economic cycles, since these provisions are not deducted from the tax, the tax base may not adequately reflect the profitability of the entities,” explains the governor.
This approach is in the same line as that introduced by the Minister of Economy, Carlos Body, who, since spring, has proposed converting the temporary tax on banks into a tax linked to the “interest rate cycle.” What Escrivá calls “neutrality”, the Minister of Economy calls “balance”, which would be achieved by “adapting” the tax that was designed in 2022 in response to the extraordinary benefits obtained by the financial sector due to the escalation of interest rates. official interest of the European Central Bank (ECB). A strategy that has sought to stifle demand and economic activity in general (making household mortgages and other loans more expensive) to moderate inflation; and that, along the way, has directly benefited the banks.
Both positions clash with the other part of the coalition government, that of Sumar. This Monday, at a press conference, Sumar’s economic spokesperson, Carlos Martín Urriza, highlighted that “what we want is to maintain taxes and not return them through the back door. It does not seem logical to introduce a gift. “They would not understand that we establish a tax and then make a series of deductions.”
As he added, “within the government partners the distance is great because for us the taxes of the banks and energy companies are non-negotiable.” In 2024, the temporary tax on banks has collected 1,695 million euros, a figure similar to that of 2023, as recently announced by the Ministry of Finance.
“These liens [el de la banca junto al de las energéticas]which have a first advance payment in February and a second settlement payment in September, follow the recommendations of international organizations that request a greater contribution from those sectors with great benefits. In both cases, the known payment for the 2024 financial year is made taking into account the results obtained in 2023,” explains the department headed by the first vice president, María Jesús Montero.
“These figures, which were approved at the end of 2022, are part of a fair and progressive fiscal policy of the Government where a greater effort is requested from those who have the most, such as large multinationals through a minimum rate of 15% or large assets through the Solidarity Tax on Large Fortunes,” continues the Ministry of Finance.
As this newspaper has analyzed on other occasions, the corporate tax has many ‘holes’ that companies, especially the largest ones, take advantage of so as not to pay taxes as much as they should.
“In this sense, both credit institutions and energy entities accumulate record profits, so a greater tax contribution is coherent, resulting in better public services for the social majority of the country,” they add from Haceinda.
The tax on financial institutions affects credit financial entities and establishments whose income from commissions and interests to clients exceeds 800 million euros. In this case, the tax base is the sum of the interest margin and commission income and expenses, and the applicable percentage is 4.8%.
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