Financial services, mostly commissions, that have so far been VAT exempt, will be taxed at a 6.5% rate, according to the government proposal.

The government defends the tax on grounds that the financial services industry must carry its part of the burden of fiscal consolidation.

It believes the tax would net EUR 50m in additional budget revenue, a much needed boost for public finances.

The tax will be levied on commission on loans, loan brokering and management, loan guarantees, deposits, payments and other transactions, including securities trading and investment fund management.

The government also plans to adjust the 2011 act that imposed a tax on bank assets as a means of penalising banks which had scaled back lending to businesses, thereby kick-starting lending.

Government documents suggest the tax has not worked so far in that lending has been reduced further. But it nevertheless plans to narrow exemptions in order to extract more tax receipts from the banking sector.