The Parliamentary Finance Committee convenes today (1/7) with a heavy agenda. Among the topics is a bill proposed by AKEL to establish a fund, financed by banks, to assist citizens. This proposal revives the discussion on taxing the windfall profits banks have gained from interest rate hikes.

According to AKEL, the surge in inflation over the past three years and consecutive interest rate increases have created adverse economic conditions for citizens. Households and businesses have shouldered financial burdens, significantly affecting their loan repayment capabilities. Thus, AKEL argues for measures such as an emergency levy on banks' unexpected profits, which have risen, and the creation of a special fund to support vulnerable population groups.

Specifically, AKEL's bill proposes the establishment of a "Social Solidarity and Borrower Support Fund" to address the emergency conditions resulting from the inflation rise and the successive decisions by the European Central Bank to increase interest rates over the last three years.

The fund's establishment and its financing, which will include an emergency levy on the unexpected profits of financial institutions, aim to distribute the economic impacts of inflation and interest rate hikes more equitably across society.

The fund's purpose, according to AKEL, will be to subsidize:

• Support Plans

• Educational and informational actions to combat financial illiteracy

Regarding the determination of this emergency levy, the bill stipulates that it will be imposed for the tax years 2024 and 2025 on the increase in net interest income compared to the revenue of the 2022 tax year. The levy will amount to 5% of the said income.