Austria's Mitterlehner Opposes Introduction Of Banking Tax

by Ulrika Lomas, Tax-News.com, Brussels

27 January 2010

Austria’s Economy Minister Reinhold Mitterlehner has expressed his fierce opposition to the introduction of a tax on the country’s banks, as proposed by Chancellor Werner Faymann.

Mitterlehner has warned that the introduction of a such levy on banks, a “false tax,” at such a delicate stage of the country’s economic recovery, would merely serve to make credit more expensive for both firms and private consumers. Tax increases should be used as a last resort, he added.

Rather than introduce a new levy, for which customers would inevitably foot the bill, Mitterlehner has instead called for improved banking regulations and for an increase in the amount of minimum own capital that banks are required to hold.

Former Governor of the Austrian National Bank, Klaus Liebscher, has also vehemently rejected the idea of a new levy imposed on the country’s banks, advocating instead both stricter own capital requirements and the introduction of “crisis prevention” measures.

Aware of the need not to damage growth, Financial Secretary Andreas Schieder nevertheless remains adamant that banks should be required to contribute to the country’s budget deficit. Loans to small and medium-sized businesses could be exempt from the levy, he concluded.

The introduction of a balance sheet tax of 0.07% would, according to Chancellor Faymann, serve to generate in the region of EUR500m a year.

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