Italian Prime Minister Giorgia Meloni said that a windfall tax on banks’ profits, which has worried investors, could be tweaked as long as the state receives the same expected inflow.
(Bloomberg) — Italian Prime Minister Giorgia Meloni said that a windfall tax on banks’ profits, which has worried investors, could be tweaked as long as the state receives the same expected inflow.
“If we will need to amend the tax on banks, we will do it as long as the inflows will be unchanged,” Meloni told RAI1 television, adding that the value of expected receipts is just under €3 billion ($3.2 billion).
Meloni commented on the tax on a popular TV show after the European Central Bank warned of potential negative side effects from the controversial levy. The plan for the tax, introduced by the government in August with an emergency decree law, is currently subject to parliamentary approval during which it can be amended.
Italian banks were leading declines on the European stock benchmark early Thursday after Meloni’s comments. BPER Banca SpA dropped as much as 3%, the worst performer on the STOXX Europe 600 Banks index. Intesa Sanpaolo SpA and UniCredit SpA were down more than 2% as of 9:15 a.m.
Almost one year since taking office, the leader of a right-wing coalition is facing dire economic conditions just as her government readies its first budget law. The 40% windfall tax on banks’ profits announced in the middle of the summer is one of the measures with which it plans to finance it.
Investors are watching closely. Italy’s 10-year yield rose to a six-month high Wednesday. It has been climbing steadily since the surprise announcement of the planned tax.
However, its premium over German peers — a major gauge of risk in the region — remains more contained, hovering around the year-to-date average of 179 basis points.
Meloni also faces mounting tensions with the European Union, and during the TV show she criticized European Commissioner Paolo Gentiloni, who is responsible for economic matters. “He is more critical than collaborative,” she said.
On Wednesday, Meloni reiterated her appeal to European authorities not to waste time in giving the green light to Deutsche Lufthansa AG’s investment in the country’s carrier ITA Airways. The German airline at the end of May agreed to buy 41% of ITA, targeting an expansion in Europe’s third-largest aviation market.
–With assistance from James Hirai.
(Updates with market reaction in fourth paragraph)
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