Tax on greed: central bank's reaction

The level of the interbank offered rate ROBOR, which serves as benchmark for floating-rate loans in lei, is attributable to the entire country, it depends on the domestic realities and first of all on the inflation rate, therefore one cannot say that the banks are greedy because they increase this index due to certain disorders of the economic system, on Tuesday night said for the private Digi 24 broadcaster, Adrian Vasilescu, strategy consultant with the National Bank of Romania (BNR). 

"The ROBOR level is attributable to the entire country. The ROBOR is the average interest rate at which Romanian banks borrow among them. (...) And yet I don't understand the tax on greed. I believe that a quite deeper philosophical thinking is needed here, because I don't know whose greed it is. The banks, if they were to set the ROBOR by themselves, the state could say something like this: you've set a very high ROBOR for yourself, you, this bank, and there, you are greedy, and for such greed I, as the state, am entitled by Constitution and the laws of my country to tax you. But things are not like this. The ROBOR interbank offered rate is set on account of certain country realities and first of all on the inflation rate. When the inflation has been for two years and a half at very low levels, one year and a half it was even below the average inflation, meaning below zero, all of that period the ROBOR interbank offered rate was zero and something. When the inflation rate began to climb, in October last year and it only climbed for one reason: the shock created by certain regulation authorities that have increased one by one and periodically for several times, from October last year until this year's summer, the electric power, the thermal energy, the natural gas, products whose price hikes are reflected in the whole picture of the prices.(...) All these father inflation and the ROBOR inflates too, because the ROBOR is an interest rate and in one country's economy there are two Siamese sisters: the interest rate and inflation," Vasilescu explained. 

In his opinion, the state should say that it taxes the banks because inflation is high and the ROBOR is climbing, but then again he adds that the state has the right by Constitution to apply taxes, given that Romania has the lowest quantum of revenues to the budget relative to the gross domestic product (GDP), however, everything must be carried out in a transparent way. 

The Public Finance minister Eugen Teodorovici on Tuesday night at the Victoria Palace announced that the Government puts forward as of 1 January 2019 a tax on the financial-banking institutions called "tax on greed", in case the 3-month and 6-month interbank offered rates ROBOR exceed a certain value, the impact of such measure being able to reach 3 billion lei.