Wednesday, 30 December 2015

Parliament Approves New Banking Tax

The Polish parliament has passed a law introducing a tax of 0.44% on bank assets. The law was passed with the support of MPs from PiS, Kukiz'15 and the PSL, with PO and .Nowoczesna voting against.  The law will come into effect from February 2016. 

The tax will affect both Polish banks and branches of foreign banks, as well as credit institutions and insurance companies. The government says that it intends to use the money gained from this tax to finance its electoral promises (such as parents receiving PLN 500 a month for their second and each subsequent child). The opposition has claimed that this will result in foreign banks moving their business to other countries and to banks passing the cost onto customers through raising charges, etc. 

One result of the neo-liberal transition has been the creation of a banking system dominated by foreign banks. At the end of 2014, 61.5% of banking institutions were controlled by foreign banks. The banking sector has so far not only avoided paying tax, but also enjoys some of the highest fees and commissions in Europe. According to a recent report by Golden Sachs, 27% of the income of banks in Poland comes from fees and commissions, the fourth highest in Europe. Banks in Poland have continued to make huge profits, which they have not passed onto clients by reducing costs. Between January and September this year, banks in Poland made a net profit of 12.40 bln PLN.  

The biggest opposition to the introduction of the tax on banks came from the party .Nowoczesna, led by Ryszard Petru. Petru was assistant to Leszek Balcerowicz, when he was Finance Minister between 1997 and 2000. It was during this time that a large section of the Polish banking sector was sold off to foreign banks. It was also when a compulsory private pension system was introduced, that guaranteed a steady flow of money from the state social insurance system to the private financial system, which led to a huge increase in public debt. It was also incidently a time when economic growth declined from around 7% to 1% and unemployment almost doubled to nearly 20%. After this, Petru worked as an economic expert for a number of banks and financial institutions, before formally entering politics earlier this year. 

And herein lies the problem. PiS are using the imbalances and unfairness of the capitalist system developed over the past 25 years to justify the creation of a more national form of capitalism, accompanied by  a more authoritarian political system, based on nationalism and Catholic conservatism. However, the main opposition in parliament are led by those that represent the interests of international financial capital, which created the social disatisfaction that led to the election of the present government.

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