Italian banks will have to check out. Rome has indeed decided to levy a tax of 40% on the “surplus profits of billions” of euros from the banks to compensate for the cost for households and companies of the surge in interest rates, announced Monday evening the vice- Prime Minister Matteo Salvini.
“The European Central Bank’s rate hike has increased the cost of money for households and businesses,” he said in Rome after a Council of Ministers. This rise, which has significantly increased the profits of banks, has harmed their customers who are bearing the full brunt of the increase in their borrowing rates, lamented Matteo Salvini.
“A measure of fairness”, pleads Salvini
“It’s not a few handfuls of millions, but a few billions. It is a measure of fairness, ”assured the boss of the League, a far-right party member of the government coalition led by Giorgia Meloni.
The tax on banks’ excess profits, which must be settled by June 2024, will concern the accounting years of 2022 and 2023, according to a government source. The 40% levy will be made if the net interest income recorded in 2022 exceeds the value of the financial year 2021 by at least 3%.
This tax will be applied to the part exceeding the amount of the previous financial year. For the profits of 2023 compared to 2022, the threshold from which it will be levied goes up to 6%. However, the amount of the extraordinary tax may under no circumstances exceed a proportion equal to 25% of the value of the net assets of the bank.
Prime Minister Giorgia Meloni intends to mobilize funds for the draft budget for 2024, which risks running out of resources due to the surprise drop in GDP of 0.3% recorded in the second quarter. The revenue from this tax will be paid into a fund intended to finance measures aimed at reducing the tax burden on households and businesses.
A measure also taken by Spain
Italian banks, like their European competitors, saw their net interest income soar in the wake of the rise in interest rates, without increasing the remuneration of their customers’ current accounts. The first Italian bank Intesa Sanpaolo saw its net profit jump 80% to 4.2 billion euros in the first half, thanks to the income generated by the rise in interest rates. Its rival UniCredit posted a half-yearly net profit of 4.4 billion euros.
Italy is also not the only country in the European Union to take such a step. Spain’s left-wing government has also introduced an exceptional tax on banks scheduled for 2023 and 2024, drawing criticism from the ECB.