Spain is preparing a plan to impose a tax of under 5% on banks’ net interest income and commissions, Reuters reported citing sources aware of the plan.
The move is part of the government’s plan to raise €3bn to dampen the impact of inflation.
Last week Spanish Prime Minister Pedro Sanchez revealed that a temporary banking tax would be imposed between 2023 and 2024 but did not provide details about the plans.
A similar tax on windfall profits of firms operating in the energy sector is expected to fetch around €4bn for the government.
Details of the proposed tax are yet to be finalised and could change, the sources said.
Industry sources said that the lenders are yet to be informed about the details of the tax.
The government would start discussing the tax with banks by the end of this week, Spain’s Economy Minister Nadia Calvino said.
According to one of the sources, the new tax regime could borrow inspiration from the International Monetary Fund’s approach in the aftermath of the 2008 financial crisis.
The second source said that the tax would be designed to penalise the banks if they passed on the pressure of rising costs to the final customers.
Last week, Calvino said that by taxing banks, the government aims to prevent windfall profits from expected rate hikes.
Earlier this month, the Financial Times published a report stating that the European Central Bank is exploring ways to block lenders from earning billions of euros as rates rise.