In a surprise move, Hungary’s governing parties last week discarded a coalition amendment proposal that would have prevented the levying of a new tax on bank reserves, Index.hu reports. The change comes after the government previously backtracked on plans to make part of banks’ reserve liable to corporation tax in the face of stiff opposition from the Bank Alliance (BSz), which represents banking interests in Hungary.
Any new tax would put an additional burden on an industry that since 2004 has been paying a special levy.
According to the report, the amendment shielding banks from new taxes was drafted by the Finance Ministry, but was unexpectedly withdrawn after objections were raised in a government committee meeting.
The decision apparently came as a surprise for both the BSz and the Hungarian National Bank (MNB), which said they hadn’t been notified about the government’s intentions. The move is also puzzling as both governing parties and the government itself had previously voiced support for the amendment in committee meeting.
The new tax, which Parliament is due to vote on next week, would tap bank reserves by an estimated Ft 20-Ft 30 billion (€70 million-€117 million), although the government said it expected only about Ft 10 billion in extra revenues from the measure.