Despite appearing to lack the necessary support in parliament, a bill imposing a new ‘bank tax’ will go to the House plenum later this week.

Tabled by opposition party Akel, the legislative proposal would levy a tax on banks for their ‘windfall profits’ over the past three years – unusual profits from the spread between high lending rates and low deposit rates.

According to Akel, the measure intends to raise €100 million for tax years 2024 and 2025. The revenues would go toward supporting vulnerable groups and borrowers – such as subsidizing housing schemes or subsidising lending rates.

Akel are calling it a one-off ‘solidarity level’ aimed at providing some relief to people hit hard by rising inflation.

Following advice from the attorney-general’s office, Akel agreed to amend their original proposal, so that the tax revenues go directly to state coffers.

Under the initial proposal, the tax receipts would have gone into a special fund – but the attorney-general deemed this arrangement unconstitutional.

Reports said that, other than Akel, the bill has the backing of only Edek and the Greens. The other parties will make their stance apparent during the vote at the plenum. Disy, Diko and Dipa would likely vote against.

Likewise unenthusiastic about the proposal is the finance ministry and the banks association. The former says the tax might discourage foreign investors, the latter argues that it would be the third tax that commercial lenders get saddled with.

Answering the criticism, Akel leader and MP Stefanos Stefanou said the three taxes combined would amount to far less than the single tax on banks imposed in other EU member states.

According to Stefanou, banks in Spain face a 25 per cent tax, in Latvia 20 per cent, in the Czech Republic 21 per cent, and in Lithuana 15 per cent.

“What’s at stake here is the political will, not whether the legislation is a good one,” the MP asserted.

“There’s been an attempt at foot-dragging and shielding the banks.”

The Akel boss conceded the bill might not get enough support to pass. But he added that, regardless, parliament “must send a message to society, it must show that it is alive to the distress caused by the high cost of living and the high interest rates”.

Stefanou lambasted the banks for raising their lending rates, and said banks are even charging for electronic payments.

Even if the bill passes, the Tax Department has indicated it doesn’t want the responsibility of having to allocate the tax receipts.