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The Dutch parliament has approved a proposal to lift a levy on banks, making the Netherlands the latest country to target the sector and hitting shares in its largest lenders.
The lower house of the Dutch parliament late on Thursday voted in favour of tax rises to help fund a proposed increase in the minimum wage and childcare support in 2024.
One of the measures was a 70 per cent increase in the country’s bank levy, which would bring an extra €350mn a year. A separate new tax on share buybacks by all listed companies was expected to bring in an additional €1.2bn.
While the measures, added to the government’s Budget of Tuesday must still pass the Senate, the vote in the lower house was enough to knock shares in ING and ABN Amro, the country’s largest banks.
Shares in ING, the biggest Dutch bank by assets, dropped 5 per cent on Friday morning, while those of rival ABN Amro fell 4 per cent.
Alongside the move to increase the levy, MPs also voted to lift the highest rate of corporate tax by two percentage points, generating another €450mn.
Mark Rutte, the outgoing prime minister, warned against the move, saying it would drive away investors.
The Dutch Bankers’ Association agreed and told MPs they were “playing with fire”.
“It is naive to think that society will benefit from this increase in taxes. Higher costs for businesses also lead to higher costs for consumers,” said Medy van der Laan, its chair.
“If companies leave our country for these reasons and others do not settle here, you will miss out on large tax revenues. It is ‘penny wise, pound-foolish’. The House is playing with fire.”
Rising interest rates have boosted bank profits as they benefit from the difference between the rates they pay out to depositors and the interest they make on loans.
But as profits have hit the highest levels since the global financial crisis, politicians have sought to target lenders with higher taxes to help pay for measures to support voters facing an increase in living costs.
Italy’s banks suffered steep share price drops last month when the government proposed a new tax on its lenders, following similar moves made by governments in Spain, Hungary, the Czech Republic and Lithuania over the past year.
Bank executives and lobby groups have hit back hard against some of these measures, in particular in Spain, where the industry has considered a legal challenge to them.
In Italy, Giorgia Meloni’s rightwing government faced a fierce backlash from bankers and was criticised by investors for the surprise decision to introduce a one-off windfall tax on lenders, which was later watered down.
The European Central Bank has also raised concerns about some of the new tax plans on lenders. Bank bosses argue they are only just returning to more normal levels of profitability after years of record-low interest rates.
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