The Federation of Employers and Industrialists (OEB) expresses its deep concern about the resumption of the debate on the imposition of additional (in addition to the special fee paid since 2011) extraordinary taxes on banks’ profits and which are inaccurately characterized as unexpected.
The only thing that was unexpected at the time of the collapse of our financial system and the fiscal bankruptcy of the State during the crisis of 2011-2014, was the trust shown by international investors and with a high degree of risk contributed decisively to the rescue of the Banks and by extension of the entire Cypriot economy.
These investors supported this strategic sector with billions and for years they had no return, no dividend and no benefit. But they saw the prospect and showed confidence in the stability of the legal and tax framework. Through a strict policy of limiting costs, with the widespread use of technological applications and with a dramatic reduction (more than 50%) of the staff, they managed to have profitable results for the first time in a decade.
OEB considers it unthinkable that a sector should be punished because with its prudent policy it has settled down and become profitable. Furthermore, this is also dangerous, as no serious investor will trust our country from now on: If an additional extraordinary tax is imposed on banks today, tomorrow it can be imposed on any other sector or economic activity.
In addition to the above, the interventions under discussion, in addition to being potentially unconstitutional, are directly contrary to the recommendations of the International Monetary Fund and the European Financial Stability Mechanism and may have a negative impact on the credit rating not only of the sector, but also of our economy as a whole.
OEB calls on the country’s political forces to abandon initiatives that, if they are adopted against hope, will in the medium term hurt those whose initiatives seek to benefit. From 2017 to 2024, Banks have paid a total of €755 million to the public coffers as corporate tax on profits and as a special tax on deposits. The State can use if it wishes, without side effects, part of it for social solidarity purposes.
