Bank extra profit tax, what changes for those with a mortgage and why there is a risk of increases
The extra profit tax from the banks decided by surprise by the government in the last CDM before the summer break has created chaos on the markets. Yesterday 9 billion went up in smoke. According to initial estimates, the revenue expected from the executive is between two and three billion. While due to the rate hike wanted by the European Central Bank today an average variable rate mortgage stipulated in January 2022 causes borrowers to pay out 2,300 euros more. And in July 2024 the increased share should reach 5,300 euros. But – explains Corriere della Sera – with the new rules the cost of mortgages restarted could increase. Why banks might choose to pass the cost of the new tax on to customers (at least in part). The newspaper calculates a possible 0.5% increase in the cost of business loans and new mortgages.
Lorenzo Bini Smaghicurrent president of Societe Generale and former ECB board member says the tax could be unconstitutional. “It is not true – Bini Smaghi explains to Corriere della Sera – that credit institutions have made more profits than services, luxury, energy or mechanics. There is no reason to penalize one sector over another: why create an ad hoc tax? While a levy tailored to profits from oil price increases may be justified, there is a phenomenon here that affects all sectors and that is inflation and which has allowed many of them to have a increase in temporary earnings. I don’t see why to distinguish banks from automotive or pharmaceuticals”.
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