Latvia may introduce an excess profit tax for banks on an individual basis, said Minister of Economy Viktors Valainis on the Latvian Television program "Morning Panorama". He noted that the banks' profits for the first five months of this year amounted to 250 million euros, but at the same time the volume of issued loans has not grown as much as desired, so it is necessary to find a way to significantly increase the volume of issued loans. Valainis also noted that banks have received such profits not due to an aggressive credit policy, but because the European Central Bank has raised interest rates to curb the sharp rise in inflation. "We need banks to invest this money in the economy," the Minister of Economy emphasized, adding that the most effective way to stimulate lending to the economy would be to introduce an excess profit tax for banks. Valainis also noted that currently the volume of loans issued by banks has grown by about 3% compared to the same period last year, while the desired growth should be 8-10%. "We need to find more effective incentives. It would be a kind of agreement with banks – we charge you this tax, you don't have to pay it if you start financing the economy," said the Minister of Economy. Valainis stressed that the excess profit tax could also be introduced individually for each bank in order to avoid "collective irresponsibility, when you can say – we are already financing, but others are not." According to the Minister of Economy, if a bank meets the requirements to increase lending, the amount paid in excess profit tax will be returned to it. The excess profit tax could be introduced for banks starting next year, Valainis added.
