Fedea warns new bank tax will penalize business growth

He think tank

Fedea, whose board of directors includes large Spanish corporations, warns that the new bank tax agreed between the government and its parliamentary partners includes “very serious fundamental problems” which it believes are not only unconstitutional but will also be punitive enterprise growth. and will harm customers.

In the note, Fedea chief executive Angel de la Fuente warns, among other things, that the progressive nature of the tax “disincentivises growth” for banks, “having a negative impact on their efficiency.”

As proposed, it would consist of a tax of between 1% and 6% on banks’ income from interest margins and fees. The previous figure included a rate of 4.8%, although its application only occurred with 850 million of annual income.

More penalties for CaixaBank, Santander, BBVA and Sabadell

In this case, the impact would be 1% for the first 750 million, 3.5% from 750 to 1500 million, 4.8% from 1500 to 3000 million, and 6% above 3000 million. The country’s big banks – CaixaBank, Santander, BBVA and Sabadell – exceed this latest figure, meaning they will suffer a significant tax increase from the previous 4.8%.

“Under the guise of foregoing supposed extraordinary profits that are unlikely to justify a permanent tax,” the tax would affect such elements as “the availability of credit, the competitiveness of the banking sector, and the social performance of the heirs of the old savings banks.” “, he warns.

Another difference is that unlike the previous model, in which the CNMC was appointed as the body responsible for ensuring that the tax was not passed on to customers, banks will now be able to pass it on. According to Fedya, this is something “reasonable”.

“A fine for a sector that is unfriendly for ideological reasons,” says Fedya

For him thin tankThe new tax “is more of a penalty on a sector unfriendly to the government majority for ideological reasons than a tax typical of the rule of law.” This figure “does not exactly contribute to strengthening legal security, thereby discouraging domestic and foreign investment and economic growth.”

He said the tax “imposes a burden on certain entities based on ideological biases” and “based on their relative bargaining power” because the energy sector managed to avoid the tax.

The new formulation transforms the tax from a “non-tax levy” into a tax, which in principle is “much more consistent” with its nature, although, according to De la Fuente, “it has the secondary effect of allowing it to be coordinated with provincial treasuries” to Euskadi and Navarre had the opportunity to modulate its effect.

When analyzing its legal suitability, several elements are taken into account: some in form and others in substance. One of the first is its “unorthodox” treatment through amendments and without the collection of mandatory reports from the competent ministries and various advisory bodies such as the Council of State, which would predictably hint at its “dubious constitutionality.”

The fundamental elements, he insists, raise “very serious fundamental issues.” A sector-specific tax, which is also based on gross income rather than profit, “is difficult to reconcile with both the Constitution and the General Tax Law (LGT) due to its dubious connection with economic potential, its lack of generality and the risk of double taxation.”

In addition, he understands that this measure may also violate other basic constitutional principles such as equality and the prohibition of arbitrariness.