Romanian banks to pay “greed tax” on assets quarterly

The Romanian banks will pay quarterly the so-called „greed tax” imposed by the government, a measure that risks pushing interest rates higher in Romania. Calculated at the current money market rates in Romania, the tax on assets will be of 0.3 percent of assets on quarter, meaning that the total annual tax will rose to 1.2 percent.

The Romanian government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, calculated at the current ROBOR 3M-6M level.

But so far it was not clear if the tax is calculated at annual or quarterly level.

On Monday, Darius Valcov a special counselor of the prime minister and a close confident of the PSD head Liviu Dragnea, said that the tax on assets will be paid quarterly.

Valcov, considered one of the initiators of the new tax, was sentenced at 8 years in prison in corruption case but the sentence could be appealed.

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Concrete Example of Transition to the Circular Economy

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Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered after the first 11 months of this year a deficit of RON 26 billion (EUR 5.6 billion), or 2.74 percent of estimated GDP, 2.5 times bigger compared with the same period of 2017 as soaring expenses overshadows revenue increase, according to the data released by the Finance Ministry.

Budget revenues rose by 14.6 percent against the first 11 months of 2017 but expenses surged by 20.6 percent.

New taxes in 2019

Desperately needing money to finance its soaring expenses,  the government has recentlty introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.

The government also imposed special taxes of 2 percent of turnover to energy firms and of 3 percent to telecom companies.

Experts say that capping internal natural gas prices will hit hard the two main gas producers in Romania, Romgaz and OMV Petrom, and will limit investment in gas fields, while the advantages for retail consumers are only for short term.

EU competition legislation bans such practices and energy directives impose a liberalization of gas prices, which Romania had already done by April 2017.

Due to the new regulation, Romania risks infringement procedures by the European Commission. Experts also argue that such a measure favours gas imports from Russia.