February 24, 2017 / 9:20 PM / 3 years ago

Sweden drops plans for bank tax, proposes higher resolution fund fee

STOCKHOLM (Reuters) - Sweden’s government has dropped plans for a bank tax after a consultation process drew largely negative feedback and will instead propose that banks pay more into the industry’s resolution fund, the finance ministry said on Friday.

The centre-left minority government has long sought to impose a financial services tax, saying the sector - which is exempt from value-added tax - should pay more to the state.

But critics say a tax would hit the financial services industry, which is a major contributor to the Nordic country’s economy and could push some financial firms to move jobs abroad.

Banks currently pay an annual fee to the resolution fund, which is a part of the system for crisis management in the financial sector. The fees add about 7 billion crowns to state coffers, the ministry said in Friday’s statement.

The new proposal, which is backed by the government and the Left Party would strengthen public finances by more than 3 billion Swedish crowns (266.35 million pounds) in 2018 and by more than 6 billion crowns in 2019 due to a growing banking sector, the ministry said.

Reporting by Bjorn Rundstrom; Editing by Catherine Evans

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