A leading Belgian economist has claimed that the Federal Government's much-heralded new bank tax should not prevent the country's leading commercial financial institutions from increasing customers' savings rates.
Eric Dor, the Director of Economic Studies at the IESEG School of Management, also noted that the €150 million in additional government revenue raised by the levy pales in comparison to the financial sector's bumper earnings over the past year.
"These results deserve to be put into perspective," Dor told The Brussels Times. "The tax surcharge is quite small compared to profits. And the profits in 2023 will be even higher."
He added: "To say that this tax increase compromises the ability to increase rates on savings deposits, as claimed by Febelfin [the Belgian financial sector federation], is a very exaggerated interpretation."
Very limited impact
Dor estimated that BNP Paribas Fortis, Belgium's largest bank, will only pay €39.6 million under the Federal Government's tax scheme, which was announced earlier this week as part of the new federal budget. By contrast, BNP recorded a net profit of €2.2 billion in 2022.
Dor also calculated that Belgium's other major banks will face levies that are similarly minimal relative to net earnings, including KBC Belgium (€35.8 million tax vs €3.9 billion profit), Belfius (€22.5 million vs €976 million), and ING Belgium (€22.4 million vs €330 million).
"This [tax scheme] is insignificant compared to a law that would have forced banks to increase the average rates paid on savings deposits," Dor said.
"Regardless of the question of determining whether this bank tax increase was to be desired or avoided, which divides the protagonists, it must be noted that its impact on the results of the banks will in any case be very limited."
Rate resistance
Belgium's financial institutions have come under increasing pressure to increase their savings rates over the past few months, as repeated rate hikes by the European Central Bank (ECB) have largely failed to be passed onto savers.
Last month, leading consumer rights group Test Achats noted that the discrepancy between the ECB rate and the interest rates offered to savers is the primary cause of Belgian banks' soaring profit margins.
"While banks can now deposit their money at the European Central Bank at 4%, the average interest rate on savings accounts in July was only 0.49%," Test Achats noted. "This is an unfair and unacceptable situation."
On Tuesday this week – just hours after the "Vivaldi" coalition government announced its long-awaited fiscal plans for 2024 – Febelfin CEO Karel Baert warned that the new tax would deprive commercial banks of the "oxygen" required to raise savings rates.
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"This decision affects the ability of banks to support the economy, families, and businesses," Baert said, adding: "It deprives banks of the opportunity to raise the savings rate even further. So banks will get even less oxygen."
Baert's comments were almost immediately condemned as "ridiculous" by Melissa Depraetere, a member of the Dutch-speaking socialist party Vooruit and a long-time critic of Belgium's banking sector.
Her remarks were echoed by Belgian Workers' Party chair Raoul Hedebouw, who described the new levy as "pure symbolism".
"Once again we have missed an opportunity to ask those with the greatest ability in our country for a fair contribution," he said.
