Austria's Foreign Minister Demands Bank Tax

by Ulrika Lomas, Tax-News.com, Brussels

02 February 2010

Austria’s Foreign Minister Michael Spindelegger has called for the introduction of a partial tax to be levied on banks, in a bid to finance the country’s social security system.

Given the relative strength of the financial sector compared to the real economy, Spindelegger has suggested that, where profits are made, so too should contributions to the welfare system.

Spindelegger is convinced that a flexible approach is necessary in order to ascertain how best to apply the tax, and has proposed the introduction of either a financial transactions tax or a bank levy imposed solely on speculation. Politicians must work together with the banks, he emphasized, in order to draft constructive proposals.

Foreign Minister Spindelegger has criticized the idea, put forward by both Austrian Chancellor Werner Faymann of imposing a levy on the balance of banks, arguing that to do so would result in job cuts, and would simply mean that credit would become more expensive for small- and medium-sized businesses, as well as for private households. A tax on speculation within the banking sector could generate in the region of EUR500m, he noted.

Wary of the consequences of forging ahead with the idea alone, Spindelegger is eager to strive towards the introduction of such a tax within Europe. Other countries, including Germany and France, are currently having similar debates, he concluded.

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