Taxing bank deposits will have implications

Financial Tribune – In need of new sources of revenue to compensate for the budget deficit emanating from steep declines in oil exports and reduce the ballooning liquidity, the idea of taxing bank deposits has come to the fore again, raising the possibility that the government may introduce the scheme in the 2020-21 fiscal budget.

The issue was taken up previously by the Majlis Research Center, the influential parliamentary think tank, which was reportedly in favor.

Although levying tax on bank deposit interest is a common in many countries, there are fears that the measure may give rise to the galloping inflation by pushing depositors to withdraw their money from banks and move to other safer markets.