Italy’s government to tax banks on profits from interest rate rises
Italy’s prime minister Giorgia Meloni has defended her government’s windfall tax on the country’s banks after the announcement earlier this week saw bank shares slide.
Italy announces windfall tax on banks
The one-off tax, set at 40%, would target the net interest income that banks are due to make as a result of increased interest rates.
Following a cabinet meeting on Monday, deputy prime minister Matteo Salvini confirmed that the funds raised by the tax, calculated to be around €2 billion, would be applied to alleviate the cost of borrowing for households and businesses.
“One has only to look at banks’ first-half profits to realise that we are not talking about a few millions, but of billions,” he told a press conference.
The announcement sent shockwaves throughout the Italian banking landscape and spooked the markets, causing share prices in some of the country’s biggest banks to tumble.
Bank shares have since rebounded after ministers were quick to clarify on Tuesday that it would set a cap for payouts and that the tax would not amount to more than 0.1% of banks’ total assets.
Meloni followed this by posting a video to her official Facebook account on Wednesday, in which she says: “It is essential in our opinion that the banking system behaves, so to speak, in the most correct way possible.”
“Unfortunately, however, this has not always happened and for this reason we are recording profits,” she adds.
The proposed tax will now go through the Italian parliament, which will have 60 days to decide whether or not it passes into law.
