Austria Set to Reduce National Banking Tax to Galvanize Economyby
Contributions to EU funds to be deducted from revamped levy
Banks to make one-time payment in return, Chancellor Kern says
Austria’s government agreed in principle to lower the national banking tax, asking lenders to make a one-time payment in return, as part of a plan to increase credit growth and revive a sluggish economy.
Contributions to the bank-resolution fund set up by the European Union and to deposit-guarantee systems will be deducted from the new tax, similar to the German model, Finance Minister Hans Joerg Schelling told journalists in Vienna on Tuesday. Austrian banks are set to pay about 1 billion euros ($1.1 billion) in national and European Union levies this year, compared with the 1.6 billion-euro contribution by German lenders to the EU’s Single Resolution Fund.
The banks’ one-time payments will help investments in education, research and development, Chancellor Christian Kern said after a weekly government meeting. "We’re expecting a big stimulation of the economy."
Lenders such as Erste Group Bank AG, Raiffeisen Bank International AG and UniCredit Bank Austria AG have long argued that the country’s bank tax, one of Europe’s highest, puts them at a disadvantage to international competitors and keeps them from raising their capital ratios. Erste CEO Andreas Treichl said in May that Austria’s bank tax is "excessive" and that talks about reducing it had been "frustrating."
Details of the new tax still have to be worked out, including the size of the one-time payment, Kern said. The reform is part of a broader push by the government to revive the economy, mainly by making it easier for small companies to attract investments.