Proposals on extension of bank solidarity levy presented in parlt

On Thursday in parliament, parties from the coalition and the opposition presented their proposals on extension of the solidarity contribution paid by banks and credit institutions. The Government suggests that the temporary tax on extra bank profits would be in effect for one more year, whereas the opposition is seeking for the tax to be applied indefinitely.

In the submission stage, the Government’s bill was approved by 59 votes in favour and 5 abstentions, with no one voting against.

The draft law will be further considered by the Committee on Budget and Finance. Another reading in the Seimas was scheduled for 18 June.

Minister of Finance Gintarė Skaistė told MPs that the bank solidarity contribution would fund additional defence needs, such as hosting of the German Brigade, forming the division-sized unit, procuring more air defence systems, forming an active reserve and implementing military supply projects.

If the tax is extended for one more year, it is expected to generate EUR 60 million revenue.

Meanwhile, representatives of the opposition introduced their own proposal that banks would pay solidarity contributions indefinitely. The bill was presented by MP Lukas Savickas, member of the party Democrats For Lithuania. He said this would be a sustainable and guaranteed source of income amid geopolitical uncertainty.

The MP noted that so far banks have paid EUR 250 million in solidarity contributions, which was especially significant for defence spending.

This bill was supported by 66 legislators, while 5 voted against and 30 abstained. The Committee on Budget and Finance will consider the draft law next and another reading in parliament was also scheduled for 18 June.

Earlier, President of the Association of Lithuanian Banks (LBA) Eivilė Čipkutė said it was unclear why banks have to pay higher taxes than other major businesses.

President of Lithuania Gitanas Nausėda supports the idea of extension of the levy on banks.

As reported, the Seimas approved the Law on Temporary Solidarity Contribution in May 2023. It established a 60% temporary solidarity contribution rate for part of the net interest income, which is more than 50% above the average of four financial years. The temporary solidarity contribution is paid for 2023 and 2024, separating the unexpected income from normal income.

According to the central bank, Lithuanian banks and credit institutions paid EUR 256 million in solidarity contribution for 2023.

In 2023, banks operating in Lithuania recorded net profits of nearly EUR 1 billion after paying the solidarity tax.