Austrian woes and warnings over Hungarian bank tax plans
Hungary is “playing with fire,” Raiffeisenzentralbank (RZB) boss Walter Rothensteiner has warned as the country plans to go ahead with introducing a bank tax.Hungarian Fidesz National Economy Minister György Matolcsy said after meeting with Austrian Peoples Party (ÖVP) Economy Minister Reinhold Mitterlehner today (Mon) his party would press on with setting up the controversial tax.The Hungarian government plans to take 0.45 per cent of annual net assets of banks operating in the country including Erste Bank and RZBs Raiffeisen International (RI).Rothensteiner appealed to Austrian and European political decision-makers today to make sure Hungary “doesnt exaggerate”.”The Hungarian government is playing with fire,” he said.RI boss Herbert Stepic meanwhile warned the planned tax would put institutes under “massive pressure”.Erste Bank chief Andreas Treichl said he was “not very happy” about Hungarys plans.”I agree that the financial sector must do its part to solve budget problems (after the crisis), but I think European Union (EU) members should liaise about this,” he said.Austrian bank institutes are among the biggest investors in Central and Eastern Europe (CEE).Matolcsy meanwhile said the plan was to agree on the law in Budapest this Thursday. The ruling is expected to pass through parliament as Prime Minister Viktor Orbans Fidesz party has a two-thirds majority.The Hungarian bank tax plans would not only affect banks but leasing firms and insurance companies as well.The International Monetary Fund (IMF) ordered Hungary to improve its budget deficit to minus 3.8 per cent this year.The IMF teamed up with the EU and the World Bank to support the debt-ridden country with more than 20 billion Euros in 2008.Hungary is one of just a few European countries which did not support their leading bank institutes with state money. Austria, in contrast, backed its biggest banks with around six billion Euros in 2009, and support is continuing.Austria plans to set up a bank solidarity tax in 2011 in a bid to take an extra 500 million Euros annually.The coalition of Social Democrats and the ÖVP is currently debating over whether to introduce a domestic taxation on financial transactions as well as EU leaders who have failed to come to an agreement for months.Bank Austria (BA) CEO Willibald Cernko warned stricter rules and possible new taxation schemes put between 5,000 and 10,000 jobs in the financial sector in Austria at risk.Rothensteiner said he expected banks to “hand over” the burden to their customers by issuing higher activity costs and other fees.