Italy Surprises Markets With Tax on ‘Extra’ Profits of Banks

Italian Prime Minister Giorgia Meloni’s cabinet approved a surprise tax on the “extra profits” of banks this year.

(Bloomberg) — Italian Prime Minister Giorgia Meloni’s cabinet approved a surprise tax on the “extra profits” of banks this year.

The levy was slipped into a huge package of measures that ranged from taxi licenses to foreign investment. The tax could bring over €2 billion ($2.2 billion) into state coffers, according to Ansa newswire.

Italy agreed on a “40% withdrawal from banks’ multi-billion euro extra profits” for 2023 which is set to finance tax cuts and support for mortgages for first-time owners, deputy Prime Minister Matteo Salvini said at a press conference in Rome where he appeared without Meloni.

The unexpected move came during Meloni’s final late-night cabinet session before the summer break. The announcement was left to Salvini, leader of the League party and the ruling coalition’s most vocal member on populist issues. 

Meloni’s government on Tuesday was quick to point the finger at the European Central Bank, which it has consistently criticized over rate decisions. “We have been saying for months the ECB was wrong to raise rates and this is an inevitable consequence,” Antonio Tajani, also a deputy prime minister, told Corriere della Sera.  

Italian banking stocks will be in focus following the news. Futures for the benchmark FTSE MIB index fell 1.3%, while shares of lender UniCredit SpA declined 3.6% on Tradegate versus Monday’s close.

Italian banks’ profit surged in the first half, as rising interest rates boosted income from lending. Last month, Intesa Sanpaolo SpA and UniCredit raised their full-year guidance for the second consecutive quarter on the back of the European Central Bank’s rapid policy tightening. 

Meloni used the last cabinet meeting to ratify various items of unfinished business. 

One part of the legislation deals with the transfer of technology abroad. It gives the government extra powers to control what can be moved in the realm of artificial intelligence, semiconductors, cybersecurity, aerospace and energy. 


–With assistance from Sonia Sirletti.

(Updates with Tajani in fifth paragraph, markets in sixth.)

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