European Central Bank assesses banking tax

The European Central Bank (ECB) assessed on Tuesday Poland's proposed tax on banks' assets, saying the legislation may provide incentive to transfer assets abroad. The ECB also warned that the tax may prompt lenders to restructure their portfolios in favor of riskier products and use of off-balance sheet activities. Head of the ECB Mario Draghi underlined that unlike in other EU countries, Poland levies the tax to increase budget revenues and not in connection with particular risks to the financial sector. According to him, taxing financial institutions should be targeted at "securing a more balanced spread of the costs of potential bankruptcies between tax payers and the financial sector." The ECB said that Poland should consider a "comprehensive impact assessment" of the legislation.