Senate Rejects Solidarity Tax Targeting Financial Institutions

04.27.2011 By Ioana Tudor

The Romanian Senate on Wednesday rejected a bill introducing a 2.5% solidarity tax on the profit of financial and lending institutions, which was put forward by several ruling democrat liberal lawmakers.

The Romanian Senate on Wednesday rejected a bill introducing a 2.5% solidarity tax on the profit of financial and lending institutions, which was put forward by several ruling democrat liberal lawmakers.

According to the bill, financial and lending institutions would pay an annual solidarity tax amounting to 2.5% of the profit registered in the preceding year, with the money collected to be transferred to the social security budget. The tax would be in force for three years, reads the document.

The government said in early April it does not support introducing the solidarity tax without a EU consensus, fearing that banks will transfer their profit abroad.

In February, the Finance Ministry warned that the introduction of a "Robin Hood tax" would have negative effects on the business environment, increasing transaction costs, risk and liquidity premiums, investment costs, while reducing foreign investment flows.

The bill will be sent to the Chamber of Deputies, which has the final say on the matter.