Austrian Unions Call for Higher Bank Taxes

Austrian Unions Call for Higher Bank Taxes

Image: APA/HERBERT NEUBAUER

 

Austria’s leading trade unions are calling for banks to pay more towards the national budget, arguing that financial institutions have benefited from taxpayer support while making record profits.

The Austrian Chamber of Labour (AK) and the Austrian Trade Union Federation (ÖGB) want banks to contribute €1 billion a year from now until 2029. They propose raising existing tax rates and introducing a temporary special levy.

The demand comes as Austria’s banks report soaring profits while branch closures and job cuts continue.

“A Matter of Fairness”

ÖGB General Secretary Helene Schuberth said Austrian banks had made nearly €30 billion in profit over the past three years alone. Meanwhile, she said, taxpayers had stepped in to support the sector during the financial crisis and the COVID-19 pandemic.

“If the taxpayer hadn’t bailed out the banks, Austria’s national debt would now be €10 billion lower,” she said. She also criticised banks for being slow to pass on falling interest rates to customers.

“A banking levy is a matter of fairness. It doesn’t harm economic growth and is more than justified given the sector’s soaring profits,” she added.

According to AK expert Dominik Bernhofer, almost half of EU countries have introduced similar taxes on banks in response to record profits.

The Two-Stage Proposal

Under the unions’ plan, the existing tax rate on bank assets would be increased in the first stage, generating an estimated €500 million.

A second phase would then introduce a temporary special levy equal to 100% of the revenue from the first stage, collected over five years. To ensure legal certainty, this would be written into constitutional law.

Growing Political Support

The proposal has gained support from the Social Democrats (SPÖ), whose budget spokesperson Jan Krainer described a banking levy as “a matter of budgetary and social common sense”.

“The banks have recorded the highest profits of all time during the crisis, while everyone else has been paying the price, not least through high borrowing costs,” he said.

Austria’s outgoing central bank governor, Robert Holzmann, also backed the idea, describing a banking levy as a “sensible choice” for budget consolidation.

The Momentum Institute, a think tank close to the unions, said: “Banks have been one of the few big winners from inflation and high interest rates in recent years. A fair contribution from their excess profits to the savings package is long overdue.”

Pushback from the Banking Sector

Unsurprisingly, Austria’s banks and business groups have rejected the proposal.

Raiffeisen Research head Gunter Deuber warned that a new banking levy could further tighten lending. He argued that recent high profits were partly due to Austria’s high share of variable-rate loans and other exceptional factors.

The Federation of Austrian Industries (IV) warned that further taxes on banks would restrict investment and slow economic growth. It argued that Austria’s budget problems were due to excessive spending rather than a lack of revenue.

The pro-business think tank Agenda Austria echoed these concerns, saying: “It’s problematic to single out one sector for additional taxation.”

How Other EU Countries Handle Bank Taxes

Several EU countries have already introduced similar measures.

Belgium, the Netherlands and Slovenia impose taxes on bank liabilities, similar to Austria’s existing stability levy. Italy and Lithuania tax net interest income, while Spain, the Czech Republic and Slovakia have introduced additional taxes on bank profits.

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