The Lithuanian Finance Ministry proposed increasing the corporate tax rate by one percentage point, hiking excise duty on fuel, and introducing a tax on some insurance contracts to raise additional funds for defense.
AKEL has submitted a bill proposal to tax unexpected bank profits in order to help those struggling with high loan installments due to interest rate hikes. The proposal includes a 5% special levy on net interest income for 2023 and 2024, with expected revenues of €50 million per year going towards interest subsidies for housing loans. AKEL believes the government is not adequately addressing the issue and aims to provide real relief to households and small businesses.
President Nikos Christodoulides emphasized the importance of addressing economic problems with feasible proposals within the framework of fiscal discipline. He criticized superficial suggestions, such as taxing bank profits, and stated that a holistic approach including income policy, wage increases, and energy issues is necessary. Christodoulides expressed his willingness to cooperate with anyone who has realistic proposals to address economic challenges.
By December 2023, interest rates on Cyprus bank loans for house purchases had reached an average of 5.1%, compared with the average rate of 3.8% for other euro area countries. The average interest rate on Cyprus bank loans to corporations was 5.7% in December 2023, exceeding the euro area average of 5.1%. Cyprus banks had increased their profits by 600% to over €1.1 billion in 2023. The interest income of the two largest banks increased by €830 million between 2022 and 2023, mainly due to higher interest receipts from the ECB. Cyprus banks deposited around 35% of their assets at the ECB, earning from 2% to 4% in interest in 2023. Cyprus banks offered an average interest rate of 2.06% on fixed term deposits in January 2024, compared with an average deposit rate of 3.21% in the euro area. The net interest margins for Cyprus banks exceeded three percentage points, while the average for the euro area was just over one percentage point. The Bank of Cyprus announced that €112 million of their after-tax profit of €487 million would be distributed as cash dividends to shareholders, with a share buyback of up to €25 million.