Spain says to charge tax of 0.03 percent on bank deposits

MADRID, July 4 Fri Jul 4, 2014 10:01am EDT

Related Topics

MADRID, July 4 (Reuters) - Spain on Friday said it would introduce a blanket taxation rate of 0.03 percent on all bank account deposits, in a move aimed at harmonising regional tax regimes and generating revenues for the country's cash-strapped autonomous communities.

The regulation, which could bring around 400 million euros ($546 million) to the state coffers based on total deposits worth 1.4 trillion euros, had been tipped as a possible sweetener for the regions days after tough deficit limits for this year and next were set by the central government.

Deputy Prime Minister Soraya Saenz de Santamaria announced the move at a news conference following a weekly cabinet meeting.

Spain is aiming for an end-of-year deficit of 5.5 percent after ending 2013 with a deficit of 6.6 percent of gross domestic product, just short of its 6.5 percent target. The regions have been set a deficit limit of 1 percent of GDP.

The government had last year fixed a zero percent tax rate on deposits across the 17 autonomous communities to prevent some of them charging their own rates, but never ruled out raising the taxation level.

The country has one of the lowest tax takes in the European Union after a burst property bubble crippled the construction sector, one of the largest contributors to government coffers.

Madrid passed in June a blueprint for tax reform which aims to cut income and corporate taxes to stimulate consumer demand and investment in the midst of a nascent economic recovery. ($1 = 0.7331 Euros) (Reporting by Paul Day; Editing by Julien Toyer and Hugh Lawson)

FILED UNDER: