Slovenia plans windfall tax for bank assets

The Slovenian government plans to impose a tax on bank assets as a temporary measure to help finance the reconstruction of Slovenia after the devastating floods in early August.

The tax would be levied on 0.2% of the bank’s total assets for five years. The government expects to collect around €100 million annually.

“All across Europe, new taxes are being introduced, and Slovenia is headed in that direction as well,” Prime Minister Robert Golob said, announcing the tax in a late-night news show on Monday.

Finance Minister Klemen Boštjančič, meanwhile, said the decision was “not made overnight, but in intense dialogue with the banks and after a series of analyses done by the ministry.”

Slovenian banks have been increasing their profitability mainly due to the rising interest rates on loans against still low interest they pay on deposits, coupled with continued low net impairments and provisions, he said.

The Finance Ministry said it had considered the European Central Bank’s position and the Spanish model of bank windfall tax.

According to the ECB’s opinion about Spain, the tax proceeds must not be used to cover a budget deficit but have to be used for a specific purpose.

“Therefore, we propose that the additional bank tax be a funding source for the Reconstruction Fund, which will provide subsidies and loans to finance flood damage repairs,” the ministry said.

Boštjančič said the details were yet to be hashed out with the banks in the coming weeks.

Banks in Slovenia saw their combined profit after tax rising by 145% year-on-year to €467 million in the first half of 2023.

Their total assets amounted to €51.3 billion as of the end of June, an increase of 6.7% on the same month a year earlier. The temporary tax would thus fetch €102.6 million this year.

The Slovenian Bank Association would not comment on the planned tax as yet, saying they could not comment on the prime minister’s announcement “until more details are available”.

(Ela Petrovčič | sta.si)