On April 20, members of the “Progressive” party gathered for the congress. Member of the Saeima and member of the party board Antonina Nenasheva listed the works done in the Saeima:
“We have also taken steps in the direction of economic security. A good example is the tax on bank profits. It is an important tool to reduce economic inequality. Also this month, every citizen, every family that pays a mortgage loan receives state compensation.”
Has a bank profit tax really been introduced in Latvia?
The deputy republished this statement on the “Facebook” and “X” platforms. The review of lies and delusions by “Re:Check” drew attention to it there.
So, the deputy says that the Saeima has adopted the bank profit tax, but this is not true. Less than a year ago, Lithuania introduced a surplus profit tax, or a significant additional payment for a part of an atypically large profit.
The amendments provide that banks in Lithuania will have to pay the state 60% of net interest income, which is more than half the average level of four normal years. The neighboring country decided to invest most of the 360 million euros collected in the tax in military infrastructure.
Latvian politicians debated for a long time whether to follow the example of their neighbors, but in the end they agreed not to introduce a profit tax.
The Ministry of Finance, led by “Jaunas Vienotības”, recognized it as too risky due to possible legal proceedings. Instead, it was proposed to change the procedure for credit institutions to pay corporate income tax. The “Progressives” did not object either.
This is how the LTV program “De Facto” reported about it last September:
“Progresívo” representative Andris Shuvajevs, who previously advocated for the excess profit tax, also supports the proposal of the Ministry of Finance: “Here we are also looking, and what I think is essential, at such a permanent regulation, which would mean that it would also apply to future years and in this sense would be systemic and in this way will certainly generate revenue in the following years as well.” Such a one-off capital gains tax could therefore be less effective in this respect from the perspective that it would be a one-off, apply only to this year, and then no more.”
The changed corporate income tax collection procedure means that this year’s banks must pay it in advance already in the tax year. Until now, it could even be deferred for several years until dividends were paid, and the banks did.
When asked why she is talking about surplus profit tax, if there is no such tax in Latvia, Nenasheva admitted: “It is not, it is not, it is true. We called it that in the beginning, I wrote it in a simplified way, but I agree that it is not surplus profit tax.”
At the same time, she emphasized that, by changing the procedure for paying income tax, it is planned to receive 140 million euros in this year’s budget from credit institutions. The “progressives” have insisted during the budget negotiations that additional funding should be invested in education and health care available to all, which will directly reduce inequality.
However, it should be emphasized once again that the change in the tax collection procedure does not mean that the banks pay something extra for the big profit – they just have to pay faster what the state is entitled to.
A new payment for banks is the borrower protection fee set for this year. From it, the compensation mentioned by Nenasheva is paid out to the borrowers of mortgage loans, because due to the increase in “Euribor” rates, their loan interest payments have increased significantly. However, in the poorest part of the society, there are almost no home loan borrowers and therefore no compensation, and this mechanism does not reduce inequality.
