Italy Approves Unexpected 40% Tax on Bank Profits

In a move that shocked investors, the right-wing Italian government led by Prime Minister Georgia Meloni announced plans to impose an unexpected 40% tax on bank profits, which led to a decline in its shares.

The move is a measure of “social justice,” Transport Minister Matteo Salvini said at a press conference Monday evening, setting the European Central Bank for being “responsible for setting interest rates, rather than the banks themselves.” The rationale for these increases is to combat inflation, contribute to “financing tax breaks and helping first-time homeowners obtain mortgages,” Salvini said.

“The new tax could generate huge amounts,” the transport minister stressed, but could not determine its amount, noting that the measure was proposed by Finance Minister Giancarlo Giorgetti, who did not attend the press conference to announce it.

“Let’s not get into the advantages of the numbers,” Salvini continued, “Just take a look at banks’ first quarter earnings to see that we’re not talking about a handful of millions, but maybe we’re talking about several billion.”

This sudden announcement is followed by its legislative conversion and approval by the Italian parliament, where the right-wing government has a comfortable majority.                                          Italian banks modelled on European banks have seen net interest income rise following interest rate hikes, without increasing current account bonuses for their customers.

Bank Intesa Sanpaolo recorded an 80% rise in its net profit to 4.2 billion euros in the first half of the year. Net interest income is expected to exceed 13.5 billion euros in 2023. Its rival Unicredit posted a net profit of 4.4 billion euros in six months.