Spain

Is Spain Preparing For Its Own Deposit "Levy"?

Zero Hedge,

19 March, 2013

While Spain's economy minister Luis De Guindos proclaimed in the Senate today that bank deposits under EUR100,000 are "sacred"and that "Spanish savers should stay calm," Spain, it would appear, has changed constitutional rules to enable a so-called 'moderate' levy on deposits - as under previous Spanish law this was prohibited. For now, they claim the 'levy' will be "not much higher than 0%" and is mainly aimed at regions in Spain that have "made no effort to collect taxes" based on new revenue expectations. As El Pais reports, the minister of finance and public administration, Cristobal Montoro, defends the need for such a 'levy' in their constitution on the basis of standardizing taxes across regions (and is preparing a proposal on the amounts to be paid) and although it would appear that while the European Commission could previously argue that such a 'tax' would violate the free movement of capital in Europe, it now leaves the door open to eventually effectively taxing the deposits. We can't help but remember the Tequila crisis and the constant reassurances from Zedillo up until even the night before Mexico devalued...

Via El Pais (Via Google Translate),

The Minister of Finance and Public Administration, Cristobal Montoro, has advanced on Tuesday that the government will impose a type "moderate" to bank deposits to compensate communities that saw their tax autonomy canceled after the Executive created a state tax 0% rate.  This tax on bank deposits, which has nothing to do with Cyprus, does not affect savers but requires credit institutions to pay for that capture deposits. 

 

"The autonomous communities receive timely and therefore financially compensationshall implement a moderate rate in the state tax on bank deposits," said the minister, adding that this kind "will not be much higher than 0%" . 

 

The Minister of Finance has clarified that such "moderate" will have no tax collection effort, "but that these regions serve to offset the revenue loss to see."  So, he assured that the amount will correspond to the amount "exact has been undermined by the cancellation of regional taxes". 

 

It will not be the case of Asturias, where the tax on deposits was approved by the regional budget law, while "Spanish law prohibits the adoption of this mode" stressed Montoro.  During the questioning of Senator Francisco Fuentes Socialist Group Gallardo, Montoro explained that communities of Extremadura, Andalusia and the Canary Islands, which were in force when the tax came into effect on state "receive timely compensation, which will resulting from the implementation a moderate to state tax rate. " 

 

Montoro has stressed that the Central Government is preparing a proposal on the amounts to be paid to travel to the affected communities "in the relevant joint committee" with the affected communities.  "That is the Government's intention and hope that through political dialogue can establish an agreement," said. 

 

Has advanced further the Government's intention to reduce delays for this compensation count as income to the budget. 

 

Meanwhile, Sen. Gallardo Fuentes Extremadura has quantified what will stop collecting the three affected regions in 2013, once in force the 0% of the Government, amounting to 230 million euros in 2013.  Specifically, Extremadura lose 39 million euros, 96 million Canary Islands and Andalusia, 95.5 million.  Besides, you corresponerían Asturias 30 million. 

 

The Government announced in November 2012 the creation of a tax on bank deposits with type 0%, with implementation on 1 January 2013, to prevent the regions implement your own.  A week earlier, the Constitutional Court had endorsed the tax on deposits of Extremadura, which launched in 2001 and turned in the day the government of José María Aznar. 

 

Thus, this tax was in force before the imposition of the 0% and in the case of Andalusia, the Canary Islands in 2010 and established, who created it in June 2012.  Only after it established Asturias.  So this type Montoro 0% justified by the need to standardize the tax system and maintain the unity of the internal market, after the European Commission will send a letter to the Government on the grounds that these taxes in the regions could violate the free movement of capital.  While leaving the door open to eventually effectively taxing the deposits.