Radev warns bank profit tax carries costs beyond banks
Additional taxation of bank profits requires an assessment of credit and growth costs, Bulgarian National Bank (BNB) Governor Dimitar Radev said in Sofia on September 25, 2026. He called for baseline and adverse scenarios before a final decision.
Profits also finance resilience
Radev said the proposal taxes banking activity regardless of its description as an excess-profit tax.
It applies an additional charge above a historical profit base plus a legislated threshold.
He questioned comparing nominal profits in 2027 with the 2020–2025 average: the period includes the pandemic, low rates, inflation and energy shocks, followed by changed interest-rate conditions.
Depressed profits in 2020 can make recovery appear excessive, while larger balance sheets and capital also support higher earnings.
Profits fund capital buffers that sustain lending and absorb losses.
In 2020, BNB capital and liquidity measures supported banks as private loan-payment deferrals exceeded BGN 9 billion by September.
He described banks as well capitalised, liquid and profitable.
Revenue meets financing costs
Radev said banks might reduce dividends or pass costs through lending rates, credit standards and deposit terms.
They might favor government debt over private loans or constrain sovereign purchases, raising state financing costs.
Weaker growth would erode other tax receipts.
Hungary extended its temporary bank tax alongside credit interventions and subsidised lending; he rejected attributing financing costs to the tax alone.
He argued Bulgaria's euro-area membership offers financing benefits, while unpredictable taxation risks impairing monetary transmission.
Gross revenue is not enough
The relevant test is net fiscal benefit, not whether banks can pay.
Radev's distinction matters because one-off receipts must be weighed against lasting debt costs and weaker investment.
His requested assessment would also test whether extracting profits undermines capital buffers while fiscal buffers are weakening.
Source: On taxes, credit and growth
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