Israeli Finance Minister Bezalel Smotrich on Tuesday said he would ‍introduce a ‍law that would tax commercial banks 15% on 'excess' ​profits, accusing banks of taking advantage of customers in the ⁠wake of a spike in interest rates in the past few ⁠years.

The tax ‌will apply to banks' profits that are more than 50% above the average of their ⁠profits in the years 2018–2022. It is aimed as a temporary measure for five years.

To fight rising inflation, the Bank of Israel - like other central ⁠banks - rapidly raised short-term ​interest rates beginning in 2022 from 0.1% to a high of 4.75%. It ‍reduced the benchmark rate in January 2024 by a quarter-point and ​by a similar amount to 4.25% last month as inflation has eased.

Smotrich said that a significant portion of banks' profits stems solely from the high interest rates in the market.

"Unfairly, these rates are passed on to the public quickly and in full in the form of loans and overdrafts, but only slowly and partially in deposits," ⁠he said. "It is right that ‌part of these profits be returned to the Israeli public."

Israel's five largest commercial banks reported combined net profit ‌of nearly ⁠9 billion shekels ($2.82 billion) in the third quarter.

($1 = 3.1913 shekels)

(Reporting ⁠by Steven Scheer; Editing by Alexandra Hudson)