Sánchez's taxation forces banks to break European laws

The pressure against the Government for the new tax on banks - and on energy companies - is increasing. It comes from all sides to try to soften the coalition Executive and soften the tax in the parliamentary process. Experts, the ECB, individual entities and also employers have criticized the measure. The last to do so and to warn of its risks has been the European Savings and Retail Banking Group (ESBG), the organization that represents 885 banks at a community level and which includes one of the two Spanish employers, the CECA. In a statement, the aforementioned organization focuses on the fact that Pedro Sánchez's taxation forces the bank to skip European laws. "These new taxes have put financial institutions in a difficult situation with their supervisors, as the requirement not to pass their cost on to customers is against EU law," he says. Why do you leave the entities in that situation? Because the guidelines of the European Banking Authority (EBA, for its acronym in English) on the granting of loans "establish that the price of the loans must include all the costs borne by the banks, including taxes". European regulations establish that the bank must pass on the new tax to the client. And the entities strictly abide by what the supervision laws dictate. They don't want to run into trouble with supervisors for breaking the rules... but the design of the tax leaves the sector at a crossroads. Related News standard If the Treasury will seek to soften the ECB to avoid a radical condemnation of its bank tax Daniel Caballero In 2019 he issued a very harsh opinion against a similar tax in Lithuania, which did not consult him The bill prohibits companies from passing on taxes to the consumers; What was ruled out outright was including this as a crime in the Penal Code, as the formation of Ione Belarra demanded. How will that be done? The Executive does not clarify it. The reality is that they entrust the National Commission of Markets and Competition (CNMC) and the Bank of Spain to articulate the way to monitor this aspect and be the ones to impose sanctions of up to 150% on the amount that is transferred to the client. However, more than a month after the bill was presented, neither the parties nor the Government have clarified to Competition how it should monitor this. In this last institution they are waiting for this to be clarified in the process in the Lower House. This is where the crossroads for banking arises, since the Government forces the sector to ignore European laws in order to comply with theirs at the national level. If not, they will have to face heavy penalties. Experience, likewise, dictates that in the productive fabric when costs for companies increase, so does the price for consumers, financial sources point out. What is expected is that it is transferred in some way to the price of products and services provided by banks, since this theory occurs in all sectors; but the dilemma for the entities is served. The bank is confident that the Government will lower its expectations regarding this tax, with which it hopes to raise 3,000 million euros between 2022 and 2023. And many hopes are pinned on what the European Central Bank (ECB) can say. The institution headed by Christine Lagarde can issue an opinion on the levy, as it has already done with a similar one in Lithuania. And it can do so 'motu proprio' or at the request of the Government of Spain. As published by ABC, the Ministry of Finance does have in its plans to consult the ECB as a gesture of goodwill and thus obtain its opinion, but there is no clear date when it will do so. In addition, it must be taken into account that the supervisor's opinion is not binding on the Executive. Beyond this, the European savings bank employers were blunt about the effect it will have on credit: «The recent decision of some EU countries to impose new taxes on the banking sector will further reduce its lending capacity to companies and individuals. These sectoral taxes are discriminatory and unjustified, since the expected increase in interest rates is unlikely to generate extraordinary profits in the banking sector (they may even decrease if non-performing loans start to grow). They also warn of the "risk of a fragmented tax system in the EU" and call for "greater tax harmonization between EU countries", since "additional taxation at the national level is detrimental to the level playing field by distorting competition in the EU internal market'. To all this is added that the entities emphasize that a tax like this can harm economic growth, and even more so at the gates of a recession in Europe and in the midst of an energy and inflation crisis. The other European employers' association in the sector, the European Banking Federation, also spoke in similar terms last month: "The initiatives that arise in some European countries aimed at imposing ad hoc taxes on banks are unjustified, discriminatory and, what more importantly, they fail to address the cost of living crisis.'

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