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Govt Adopts Financial Services Tax, Extends Tax on Bank Assets

Ljubljana, 11 October (STA) - The government adopted on Thursday an act introducing a financial services tax and legislation that extends the tax on bank assets. It expects to rake in an additional EUR 40m in tax revenue.

Financial services, mostly commissions, that have so far been VAT exempt, will be taxed at a 6.5% rate. The government defends the tax on grounds that the financial services industry must carry its part of the burden of fiscal consolidation.

It believes the tax would net EUR 35 in additional budget revenue each year, but it will apply only for 2013 and 2014, Finance Ministry State Secretary Aleš Živkovič told the press after the government session.

The tax will be levied on commission on loans, loan brokering and management, loan guarantees, deposits, payments and other transactions, including securities trading and investment fund management.

Since only commissions will be taxed, Živkovič said the tax would not have an impact on inflation. Companies will not shift the cost onto consumers, but even if they do it will not erode purchasing power substantially. "The consumers will not detect it," he said.

The government also amended the 2011 act that imposed a tax on bank assets as a means of penalising banks which had scaled back lending to businesses, thereby kick-starting lending.

Government documents suggest the tax has not worked so far in that lending has actually contracted, not expanded. But it nevertheless plans to narrow exemptions in order to extract more tax receipts from the banking sector.

The change will double the tax receipt to EUR 14m and the law's validity has been extended until the end of 2014.

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