Swedish ‘risk tax’ on banks to apply to lending operations abroad

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A controversial proposal to introduce a “risk tax” on Swedish banks is being expanded to cover lender’s operations outside of the country, Sweden’s finance ministry said.

The proposed tax, which was announced in September and is expected to take effect at the start of 2022, aims to bolster public coffers in the event of another financial crisis akin to that in 2008.

“This change is to protect Swedish taxpayers against problems encountered by Swedish banks in their foreign branches,” a spokesman for the ministry told Reuters.

The ministry said the new proposal will not generate more revenue than was announced in September because the tax rate has been slightly lowered.

The Swedish government said in September that it expected the levy would generate 5 billion Swedish crowns ($600.38 million)in 2022.

A lobby group which speaks for Sweden’s banks and has been previously critical of the measure declined to immediately comment on the matter.

Sweden’s financial watchdog has previously criticised the tax, saying its methodology, which is based on debt levels, was a poor way to control risk.

Photo: The Swedish Parliament, Riksdagen, in Stockholm, Sweden. EC Audiovisual Service