Romania’s misguided bank tax risks derailing economic recovery
A swingeing new bank tax in Romania is inequitable, misconceived and just plain dumb.
Over the past decade, bank taxes have been gradually spreading across emerging Europe. Hungary led the way in 2010, when Viktor Orban’s new Fidesz government implemented a swingeing levy on sector assets. Slovakia followed suit two years later and Poland in 2016.
Whether these levies were a reasonable response to industry misbehaviour or a justified means of raising revenue are questions that come more within the purview of politicians and economists than financial journalists.
But one thing is fairly clear. As bank taxes go, few if any have been as fundamentally inequitable and misconceived as that introduced in Romania on January 1.
The new levy is the brainchild of the Social Democratic Party (PSD), which has shown an increasing enthusiasm for flexing its populist muscles since scoring a decisive victory in parliamentary elections at the end of 2016.
Announcing the measure on December 18, as part of a broader tax-and-spend package that also included levies on energy and telecoms firms, finance minister Eugen Teodorovici dubbed it a “tax on greed”.
Not only is the bank tax unjust, it is also short-sighted to the point of stupidity
Romania’s banks, he said, were making excessive profits and colluding to keep interest rates artificially high.