Finance Minister Bezalel Smotrich has come out with a new threat against Israeli banks on Thursday, warning that if said banks cancel benefits for consumers following the planned new tax, it will be doubled.
"I saw a threat from the banks that they will cancel benefits for consumers if the tax is imposed on them. So I want to say to the banks from here: If benefits for consumers are canceled, I'll double the tax from 15% to 30%," Smotrich said.
"It is inconceivable that those who made profits from the rise in interest rates at the expense of the citizens of Israel and did not contribute to the war effort should benefit from the rise in interest rates without any efficiency measures on their part," he added.
Smotrich's bill for a special tax on banks was officially published this week, and the rate he proposes is much higher than that recommended by the professional team that examined the subject at the Finance Ministry. Under the current proposal, a tax of 15% will be imposed on the banks' super profits, whereas the committee recommended a rate of up to 10%.
Under the draft bill released by the finance minister, an additional tax will be imposed on a bank that posts an annual profit more than 50% higher than its average profit in the period 2018-2022. These profits will be defined as the base profit, and the tax will be at a rate of 15%. The professional team that examined the matter recommended a graduated tax of between 7% and 10%.
According to the Finance Ministry, the tax will bring in NIS 1.13 billion in 2026, rising to NIS 1.5 billion each year from 2027 to 2029. The bill proposes a temporary order valid until 2030.
Israeli banks association sharply rejects Smotrich proposal
The Association of Banks in Israel reacted sharply to the proposal to collect a new special tax from the banks. The Association's CEO Eitan Madmon said, "Completely contrary to the stance of the professional team that he himself appointed, the finance minister decided in the dead of night to declare war on the public and to impose a tax on it at a significant rate."
Supervisor of Banks Daniel Hahiashvili said today, "Imposing a tax on the banks as proposed will act against the competition that we are trying to create. If the state wants to tax excess profits, it should find a formula for calculating it and impose it on all companies across the board, not just on the banks.
"When you impose a tax on the banks it creates distortions. New players will think twice about coming in. It will deter new investors in the banks' shares. Sectoral taxation is best avoided."