Slovenian banks, companies to help finance post-flood reconstruction

9 months ago 32

Slovenian banks and businesses will help finance a substantial part of the estimated €10 billion reconstruction bill after devastating floods in August destroyed homes and infrastructure across much of the country, according to a bill approved by the government on Thursday.

Under the government-approved bill, banks will be taxed 0.2% of the total of their assets, while the annual tax bill will be capped at 30% of operating profit.

It was also ruled favouring a five-year increase in the corporate tax rate, which will rise by three percentage points to 22%. Only the difference between the existing 19% rate and the proceeds from the temporarily increased rate will be used for the reconstruction effort.

Other sources include part of the profits of the Slovenian state holding company, budget funds and EU sources.

The new tax comes amid fierce opposition from the business community, which says the higher rate will stifle investment.

Meanwhile, the European Central Bank (ECB) has warned that the bank tax could potentially damage the banking sector and the economy as a whole.

In early November, the ECB said, “care must be taken to ensure that such a tax base does not induce credit institutions to shrink their balance sheets by reducing lending beyond what would be warranted from a monetary policy perspective”.

But the government has brushed aside these concerns.

(Sebastijan R. Maček | sta.si)