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[Alpha Biz=(Chicago) Reporter Kim Jisun] Recently, there has been a growing concern about the bank windfall tax’ discussion, which has been raised around the political circle.
To sum up the explanations of the Financial Services Commission on the 6th, the government and the ruling party have recently discussed a wide range of ways to impose a kind of "Windows tax’" on banks. windfall tax is a term for taxes levied on companies that have made profits beyond normal levels due to changes in market conditions. In Korea, measures to increase the contributions of banks to the financial supplement accounts for the working class, including the imposition of additional corporate taxes, are all under review.
As the high price and high interest rates continued for more than a year and the voting sentiment deteriorated, it is believed that politicians took out bank windfall taxs with cards. The logic is that banks have made more profits thanks to high interest rates than they did at low interest rates, so they will take back some of them and use them to relieve the suffering of ordinary people. Political circles also cite the fact that some European countries have imposed cross-border taxes as the main basis.
The problem is that the side effects are likely to be greater depending on the size of the windfall tax and how it is charged. Once investor sentiment toward the banking sector freezes, banks' funding costs could increase. The market may shake in the process. In particular, a decrease in the banking sector's ability to absorb losses could hurt the macro-health of the entire national economy.
There are also great concerns within the Financial Services Commission. "Now is the time to lead banks to prepare well for the situation after next year, but this is not the time to talk about (impose a lateral property tax)," a senior official at a financial authority said.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
