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Spain’s economy minister keeps bank tax in the dark until next week

Spain’s Economy Minister Nadia Calvino arrives for a Eurozone finance ministers meeting in Brussels, Belgium, July 11, 2022. REUTERS/Yves Herman/

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MADRID, July 22 (Reuters) – Spain’s economy minister declined on Friday to give details of a new 3 billion euro ($3.05 billion) tax on banks’ profits, which are set for a boost as interest rates rise to tame inflation.

Proceeds from the tax, plans for which were announced by Prime Minister Pedro Sanchez last week, will be earmarked to help people struggling with the soaring cost of living.

After meeting bank CEOs and Bank of Spain Governor Pablo Hernandez de Cos on Friday, economy minister Nadia Calvino told reporters the tax would be introduced to parliament “next week” but declined to give any information about its design.

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Before the meeting, she told Spain’s TVE: “The decision has been made.”

“The vast majority of Spanish citizens understand it and support it because it is the right thing to do,” Calvino said.

Last week, two sources with knowledge of the matter said the government was readying a levy of just under 5% on net interest income and banking commissions. read more

But representatives of the banks said after Friday’s meeting that they still did not know any details.

“We are concerned about this tax and we think that this is not the right time or the right measure to solve the problems on the table,” said the president of the Spanish Banking Association, Alejandra Kindelan.

On Thursday the European Central Bank raised interest rates by 50 basis points. Calvino said that would inevitably boost income for lenders. read more

Another tax, on energy companies’ windfall profits, is expected to raise 4 billion euros. read more

Calvino said the impact of the Russian invasion of Ukraine had to be addressed, in a way sustainable for public finances. The conflict has caused energy and some food prices to soar, pushing inflation in Spain to highs not seen since the 1980s.

“It has to start with those sectors that are making extraordinary profits that have to contribute to financing this response to the war,” she said.

Senior bankers have told Reuters that higher borrowing costs should not be considered extraordinary gains since negative interest rates have weighed on banks for several years.

On Thursday, ECB Vice President Luis de Guindos cautioned against any tax that risked damaging the solvency of the industry, an issue that Calvino said the tax plan will address. read more

The bank tax will not follow the usual route of being approved by the cabinet and will instead be set on a parliamentary fast-track, whereby political groups submit the proposal to the lower house.

($1 = 0.9844 euros)

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Reporting by Jesús Aguado, Belén Carreño and Inti Landauro; Editing by Aislinn Laing, Elaine Hardcastle and Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.

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