New details regarding the government’s hastily introduced “greed tax” resulted in a 4.2% fall of the BET index of the Bucharest Stock Exchange to a two-year low. The immediate trigger was an interview given to business news site Ziarul Financiar by Darius Vâlcov, advisor to Prime Minister Viorica Dăncilă, considered the architect of government decree 114 which puts the new tax in effect.
Romanian Finance Minister Eugen Teodorivici announced on December 18 plans to introduce a so-called “greed tax” on telecoms companies, banks and energy utility firms.
Telecoms and energy utility companies will be subject to an additional 3% tax on their revenues and energy companies will also see their prices capped at RON 68 ($16.6) per MWh. The extra tax on banks will be a progressive tax based on the three- and six-month Romanian inter-bank offered rate (ROBOR) and with these rates currently at 3.04% and 3.34% respectively, their extra tax will be 0.9% on assets.
The additional taxes are necessary to cover the government’s already announced plans for wage and pension increases. According to estimates of the Romanian financial press, these taxes will bring in an additional RON 10 billion ($2.45 bln) to the budget.
Vâlcov clarified in the interview that the tax on banks will be established and collected quarterly – as opposed to market expectations of an annual tax. The decree itself did not specify these details. Estimates indicate that Banca Transilvania will have to pay a greed tax of RON 776 million ($189 million), equivalent to nine months worth of the bank’s profit while some smaller banks will not make enough profit to cover the extra tax.
Bank shares, were of course the worst-hit, with Banca Transilvania down 10% and BRD – Groupe Société Générale down 8%.
Title image: Finance Minister Eugen Teodorovici
