In an interview with the weekly magazine Respekt, vice governor Tomáš Nidetzký warns that the government’s attempts to implement a new bank tax could have a negative impact on the country’s financial stability. He says the foreign owned banks will react by passing the costs on to their customers and that they could end up treating their operations in the Czech Republic as mere branch offices. “In general, sector-specific taxes are non-systemic interventions. Another risk is instability of the legal environment, since we can’t know how long the tax will last if there isn’t agreement about it across the political spectrum. What’s interesting is that there are a number of ways how to shift get state money into the financial industry through tax breaks for clients or various types of support. Let’s discuss revising all the different types of state support that are in place here. Why subsidize the industry on the one hand and then tax it on the other. That’s seems unsystematic to me. In addition, there tend to be big expectations about the income these taxes will produce but then it turns out that the industry adapts and that the earnings aren’t nearly so big.”
