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Banking Association welcomes lower taxes, still considers tax burden high

Analysis

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Members of the Hungarian Banking Association have welcomed this years cuts to taxes first levied on banks as part of crisis management, however, financial institutions remain among those that pay the highest taxes in Hungary, the association said on Friday following an annual general meeting, Hungarian news agency MTI reported.

Mihály Patai, head of the association, said the leaders of the banking sector have faith in the balanced development of the Hungarian economy, and can play an even more active part in its stimulation, if granted the proper regulatory and social environment. 

The credit institutions sector is an integral part of the economy, but with sectoral taxes amounting to several hundred billion forints annually the profitability of the domestic banking sector cannot reach the internationally required minimum level.

The banking sector is ready to finance the building of new homes with the traditional tools of credit institutions, through the governmentʼs home purchase subsidy system for families with children.

Looking ahead, the association expects the small and medium enterprise portfolios to grow significantly with increasing credit demand, aided by low interest rates, reduced credit margins and the new central bank schemes.

According to association members, the uniform regulation of the European bank community raises competition, where capitalization and cost efficiency will determine how the market changes. As a result members are against over-regulation and promote the containment of excessive capital requirements and liquidity standards.

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