Interpellation regarding the non-taxation of banks' extraordinary profits (No. 615)
Session: 15th Riigikogu, 3rd sitting, plenary session
Date: 2024-06-10 20:03
Participating Politicians:
Total Speeches: 19
Membership: 15
Agenda Duration: 18m
AI Summaries: 19/19 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The session discussed Interpellation No. 615, submitted by Riigikogu members Siim Pohlak, Helle-Moonika Helme, and others on February 21, 2024, concerning the non-taxation of banks' extraordinary profits. Interpellator Siim Pohlak criticized the government's decision to burden the Estonian people and businesses with new taxes (VAT increase, car tax) while major banks earn record profits due to high Euribor, which is largely borne by borrowers. Pohlak sought to know why the government did not support an extraordinary bank tax and on what grounds an agreement was reached with the banks for the accelerated payout of dividends before the income tax rate increase, which, in the interpellators' estimation, increased the budget deficit. It was also asked whether the Prime Minister had made proposals to bank managers to support borrowers during the economically difficult period.
Prime Minister Kaja Kallas responded that the government did not support the extraordinary bank tax, citing international practice and the recommendations of economists, who consider unexpected taxes to be destabilizing and damaging to the investment environment. Kallas emphasized that it is in Estonia's interest to maintain a stable economic environment and a strong banking sector. She refuted the claim of an increased budget deficit, noting that thanks to the common understanding reached with the banks, an additional 520 million euros will be collected into the state budget between 2023 and 2025. Kallas confirmed that banks were called upon to increase solidarity with society, which has resulted in improved deposit interest rates and discussions about facilitating the transfer of loans to stimulate competition. She defended the tax reforms, arguing that they reduce labor taxes and that new taxes (such as the car tax) are necessary to ensure long-term revenue and meet environmental goals. In follow-up questions, Riigikogu members (Jaak Valge, Kert Kingo) challenged the Prime Minister's claims regarding international practice, highlighting the examples of Lithuania and the earlier United Kingdom successful bank tax.
Decisions Made 1
No decisions were made
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi announces that we are moving on to the fifth item on the agenda, which concerns Interpellation No. 615 regarding the non-taxation of banks' extraordinary profits, and Siim Pohlak has now taken the floor.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak criticized the government's tax policy, which fails to tax the extraordinary profits of major banks but instead raises taxes on private individuals and increases the prices of goods. He then posed questions to the prime minister concerning the agreement reached with the banks, support for borrowers, and short-term interest rate concessions or other European solutions, simultaneously questioning whether this approach was appropriate given that private individuals have been responsible for boosting the banks' record profits through their loan payments.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanks you and asks the Honorable Prime Minister Kaja Kallas to return to the Riigikogu podium.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kallas said she does not support extraordinary taxation of banks, as it would create instability and reduce investment. She noted that the common understanding reached with the banks—that ensuring financial stability and directing additional bank dividends into the state budget is a better path—helps achieve the tax system's goal of reducing labor taxes. This arrangement will generate approximately 520 million in additional revenue for the state between 2023 and 2025, while capital outflow from Estonia is not significantly large.
Aseesimees Toomas Kivimägi
AI Summary
The address begins with a thank you, there are a few questions, and Jaak Valge is asked to respond.
Jaak Valge
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He argues that extraordinary taxation of banks is feasible internationally, citing the UK's solidarity tax from the 1980s and the bank levy implemented in Lithuania. He then questions why Estonia isn't taking similar steps, given that the Lithuanian economy remains in better shape.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi thanks the audience.
Jaak Valge
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Jaak Valge asks whether you are actually providing justification.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas emphasized that a report by German economists advises caution when taxing windfall profits during a crisis, because although such a measure might be popular, the actual profit is difficult to determine, and an excess profit tax could, in the long term, stifle innovation and the entry of new companies into the market.
Aseesimees Toomas Kivimägi
AI Summary
The speech begins by calling Arvo Aller.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller accuses the Reform Party government, claiming the Estonian economy has declined over the past three years. He argues that the car tax is a form of retroactive taxation on the public, and asks why money is being taken from where it already exists, instead of where investment is needed.
Peaminister Kaja Kallas
AI Summary
Kaja Kallas confirmed that the introduction of the car tax is not retroactive taxation, and it will enter into force in January 2025. The rules of the car tax will start applying from that moment.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi calls upon Varro Vooglaid to speak.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He is investigating whether usury is a problem at all, how it is understood, and whether the state should intervene, and when such intervention would be acceptable, should the problem escalate to certain proportions.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas confirms that usury is regulated and restricted, and these rules also apply under the Law of Obligations Act, which is exactly how it should be.
Aseesimees Toomas Kivimägi
AI Summary
The Deputy Chairman called upon Anti Poolamets to take the floor.
Anti Poolamets
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Anti Poolamets stressed the importance of limiting excessive profiteering and suggested taking Lithuania as an example, noting that Lithuania and Latvia are similar in terms of economic structure and banking sectors, and that a bank tax has the potential to generate revenue. He concluded that the Lithuanian experience should be examined and discussed with colleagues.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas emphasized that the banks' contribution to the state budget for the years 2023–2025 is 520 million euros, which is a considerable sum.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi offered his thanks, announced that the questioning had concluded, opened and closed the debate, and declared the consideration of the fifth agenda item concluded.