New Bank Tax Will Hurt Customers, Swedish Bankers' Association Claims

A proposed new bank tax in Sweden would ultimately burden the banks' customers, primarily through increased mortgage rates, the Swedish Bankers' Association argues. Hans Lindberg, writing for the association, contends that taxing banks raises their operational costs, which are inevitably passed on to consumers and businesses.

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It is important to understand that a new bank tax would ultimately be paid by the banks' customers.

Lindberg refutes the notion that a bank tax would not affect customers or even make loans cheaper, calling such claims "disinformation and smoke screens." He explains that increased costs for providing credit must be financed, leading to higher prices. For households, this translates to higher mortgage interest rates, while businesses face more expensive financing for investments and expansion. Essentially, a bank tax acts as a de facto mortgage and investment tax, potentially raising mortgage rates by 0.2 to 0.3 percentage points, costing households with a 4 million kronor mortgage an additional 8,000 to 12,000 kronor annually.

The association also challenges the assertion that high bank profits signal a lack of competition. Lindberg points out that bank profitability fluctuates with economic cycles, and current returns are not out of line with other large Swedish companies. He stresses that profits must be considered alongside the risks banks undertake and the substantial capital buffers they must maintain to absorb losses and continue lending during economic downturns, a requirement reinforced by post-financial crisis regulations.

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What is taxed naturally becomes more expensive and certainly not cheaper.

Furthermore, the Swedish Bankers' Association disputes claims of poor competition in the Swedish banking market, citing data showing that smaller banks have increased their market share since 2015. The association's stance is that any review of banking operations must be grounded in reality, and that proposed taxes could stifle credit provision and economic growth.

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For households, it is mainly noticeable through higher mortgage rates. For companies, it is noticeable through more expensive financing of investments, inventory, machinery and expansion.