(Bloomberg) -- Sweden’s main opposition party is proposing a windfall tax on the “excess earnings” made by the country’s lenders, adding to investor concern that European banks could face stiffer taxes as politicians seek support for households squeezed by inflation.
The Social Democrats are pitching a temporary tax on net interest income in their shadow budget for 2024, the party said in a statement Tuesday, estimating it would bring in a total of 10 billion kronor ($902 million). The statement noted that lenders have been slow to pass on interest rate rises to savers.
The party would find it hard to gather a majority behind the proposal unless the Sweden Democrats sever support for the current center-right wing government, which won the general election last year.
Still, shares of the three big banks in Sweden slumped more than a European banking index which traded as much as 1% lower. Swedbank AB fell by as much as 4.6%, SEB AB by as much as 3.8% and Svenska Handelsbanken AB by as much as 2.9%.
“It is reasonable that the sectors that make a lot of money from this crisis, and that can see their profit margins increase, are involved and contribute to building Sweden stronger in the crisis,” Social Democrat spokesperson Niklas Karlsson said.
European banks have enjoyed record levels of net interest income over the last year, with lenders unveiling a wave of share buybacks as they performed well in stress tests. Against a backdrop of a cost of living crisis and rising public anger, some governments have targeted the industry.
Italy has announced a windfall tax on bank profits and Hungary is considering raising taxes on banks to close a budget gap. Last week, the Dutch parliament’s lower house approved raising taxes on banks and adding a levy on share buybacks.
In the UK, banks have faced accusations of “profiteering,” as rising interest rates boost their lending margins more than their savings offers while heaping pressure on customers. The Spanish government last year announced that it would hit banks with a windfall tax.
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