“I see no reason why banks, when they make a profit, should not be taxed with a special levy as part of consolidation,” said Minister of the Interior Matúš Šutaj Eštok. While the state treasury is looking for funds for its priorities, the coalition again raises the issue of increasing the bank levy.
At the same time, earlier this spring the Slovak government assured the public that further savings would no longer be made at the expense of ordinary people. However, financial analysts and bankers warn that if the government raises taxes on financial institutions, in the end it may be the clients who pay for it. Read the current review of why the issue of the bank levy (živnosť - trade license) is being discussed again and what risk it poses for housing and regular loans.
New budget expenses and pressure on the state treasury
Pressure on the state budget next year is constantly increasing. The situation is influenced by new expenses, possible reduction in revenue from the tax on financial transactions, and expensive government priorities—from fighting drought and modernizing transport to investments in new nuclear capacities.
Therefore, ministers are looking for additional sources of income. According to the Ministry of the Interior, thanks to their profits, banks have enough opportunities to contribute to the state budget, from which politicians want to finance priorities for families, police officers, and pensioners.
Bankers warn about breaking promises
The Slovak Banking Association strongly opposes any increase in the levy. Bankers remind that Slovak financial institutions have not had such margin indicators for a long time as banks in other European countries.
“A single Czech bank makes more profit than the entire banking sector of Slovakia,” said Marcel Klimek, Executive Director of the Slovak Banking Association.
Sector representatives emphasize that initially the government promised a gradual reduction of the bank levy (živnosť - trade license). According to the opposition and experts, keeping this promise should be a priority for the state because the stability of the banking environment is key for the economy as a whole.
How this will affect ordinary clients
According to financial analysts, possible additional pressure on banks will almost immediately affect the behavior of the financial market. Higher taxes for banks mean that additional costs may be passed on to the end consumer:
More expensive loans: increasing levies weakens the sector’s stability and automatically makes mortgage and consumer loans more expensive.
Lower deposit yields: banks may respond to worsening conditions by lowering interest rates on current or term deposits.
Economic slowdown: reducing credit activity ultimately harms the state’s tax revenues because overall economic activity in the country decreases.
The final form of consolidation and where the state will get the missing funds will be decided by the coalition council at its next meeting. Prime Minister Robert Fico noted in this regard that budget financing cannot be placed only on the shoulders of one government party while constantly increasing new expenses.
