The influence of banks in state legislation

 Banks play a key role in any developed country, managing money and financing operations and businesses which make the economy flourish. They are also relevant since they employ thousands of people in their countries. As a consequence, bankers are usually among the most rich and powerful people in any country.

 The banking sector, as well as any other professional sector, is concerned about how the world develops and how changes could affect its P&L account, so when a new and unwanted change -of any type- is introduced, they will use all their possible resources to keep their statu quo. Financial entities do this, as well as doctors, Bars associations or the pulp and paper industry.

                                              Spanish Central Bank Façade, Madrid

 However, the strength of the banking sector is outstanding. After all, they make things possible in a country, and without their support, most of the Governments in any determined country, would fall. So, it is easy to understand that Governments do not want to make the banks upset.

 This is known and accepted by the average taxpayer, as a generic characteristic of our society. Besides, these measures are usually taken in a very subtle way, because they are unpopular and put politicians under the shadow of doubt.

 Related operations: to sum up, the 2006 Spanish Personal Income tax Law (according to Corporate Income Tax Law) states that related operations should be assessed at market value, considering related operations, amongst others, the financing relationship between a bank and its Directors. That entails levying the banker’s money kept in his own bank as general income, whereas in normal circumstances it would be taxed as savings income, as a capital gain.

 Of course, the banking sector was not pleased with such a decision, but it did not last too long, because in 2008, the Personal Income Tax Regulation changed the Law, and made a sloppy exception for bankers in its Seventh Additional Provision.

 Financial leasing is a widely used contract by companies, since it provides some financial and tax benefits. The Corporate Income Tax clearly states that is has to be done through a financial entity, something which can alter the normal functioning of the market.

 Competition is not welcome: in September 2013, the Spanish Tax Agency issued a tax ruling which sets limits to crowdfunding, establishing a maximum of 6.000.-€ per investor and  year and a maximum of 3.000.-€ per investor for a single project. There is also a limit of 1.000.000.-€ for a single project. This measure is specially harmful for start-ups and entrepreneurs, since it is a new and innovative way to finance projects and ideas, and more importantly, with a great potential. This potential source of finance has now been hindered.

  Most of banking contracts are unregulated, i.e., they cannot be defined in any specific category of contract, and are usually regulated by general principles and the terms and conditions stipulated by the bank in an unilateral way. It is argued that they unregulated due to their special characteristics, but, as a matter of fact, that gives financial entities Public Entity-like power, since they act with a presumption of legality. In many cases, terms and conditions have been declared void, but after years of lawsuit.

 Corporate social responsibility is spreading its word, and financial entities should be caring about it, specially when their popularity has hit an all-time low due to recent scandals. Also, it is necessary a tighter control by national central banks, something that can be done by making them more independent. Trust is the main factor in the banking business, and banks have to regain it by leaving behind past mistakes.