Banks have been the primary losers of the uncertainty created by the Supreme Court following the Stamp Duty (IAJD) ruling. The judgment of October 16 meant breaking with a regulation maintained for more than 20 years and ratified by the Court itself through its own jurisprudence. Its reversal by the Plenary of the Court two weeks later led the Government to approve a royal decree-law that modifies both the IAJD and corporate tax. In short, banks will now be the ones paying the tax and will not be able to deduct it as an expense. All of this was defended by the Government in light of the situation of “extraordinary and urgent need” created by the final decision of the Supreme Court.
Banks always comply with the law. They complied in the past when our authorities established customers as the taxpayers. And they will continue to comply now that they are the ones who must pay it. In European countries where a similar tax exists, payment corresponds to the customer. This is also the case in the regions that have fiscal autonomy in Spain. It is said that it is necessary to reinforce legal certainty with the recent modification of tax rules. However, it is the same legal certainty that inspired a rule established for more than two decades. Without a doubt, it is fundamental that there is an environment of legal certainty and clear, stable rules where all parties are clear about their rights and also their obligations.
Banks have also seen their image deteriorate before a large part of society due to everything that has happened in the last twenty days. From the sector, we have argued that those who comply with the law cannot be punished. And yet we persistently hear that banks should have been forced to pay the tax retroactively, which, if it had occurred, would have broken basic principles such as legal certainty (legal changes are effective from their approval) or legitimate expectation (a person who was not the taxpayer cannot be made to pay a tax). Interested misinformation from third parties has been key to the development of this public debate that has accentuated the discredit and contempt towards banks. There is talk of abusiveness on the part of banks, when the payment of the tax was for the regional treasuries and did not respond to a contractual relationship with the customer. It was a tax rule that determined that the customer was the taxpayer. Floor clauses are used as an example, even though they are very different things. By the way, when talking about floor clauses, it is often ignored that at no time has the judiciary accused banks of bad faith or illegality. The fact is that banks could not comply with transparency requirements in the marketing of floor clauses regarding something they were unaware of, as it was not included in Spanish legislation.
But the penance of the banks for a sin they have not committed does not end here. From the AEB, we have defended the environment of high competition existing among our entities when assessing what decision they will take regarding the new financing conditions due to the increased cost of paying the IAJD. Each entity will make the decision that fits its commercial strategy. However, the free decision of each entity in an environment of high competition and efficiency in the sector is now publicly questioned by contesting the possibility that the cost of the tax can be passed on. Profitability is not only a priority for banks but for society as a whole. Economic development requires a strong and profitable financial system, capable of successfully facing the challenge of digitalization and thus leading the digital transformation of the Spanish economy. Appropriate profitability for banks that does not generate doubts about their sustainability in the medium and long term and that responds to the demands of their shareholders. Let us remember that the profitability of most Spanish banks at this time is lower than the cost of capital.
A recent Deloitte survey showed that Spanish banks offer more financial services than their European peers, at an average price 60% lower, and through all existing channels. Three out of four financial services provided by Spanish banks are free. And under a scheme of total financial inclusion as certified by the World Bank. Furthermore, AEB banks have not required public aid during the crisis; instead, they have contributed more than 10,000 million euros to the restructuring of troubled entities. Our banks have strengthened themselves in the last decade by appealing to investors, reaching more than 2 million shareholders in Spain and almost 5 million worldwide at this time. Banks deserve respect not only for themselves, but for their employees and for their importance, and also for their shareholders, among whom are many small savers.
It is important that we reflect on everything that is happening in a sector key to economic development and the prosperity of families and businesses. A sector that carries out its activity under strict regulation and supervision. Spanish banking fulfills its ultimate objectives with effectiveness and efficiency, as recognized by the customers of the banks themselves.
