Italy is preparing to implement a controversial tax on banks, with Prime Minister Giorgia Meloni determined to push it through parliament after the summer break. Although the government has not disclosed the expected revenue from the tax, sources familiar with the matter estimate it to be between €2 billion and €3 billion. The plan, which Meloni has claimed as her own, may still undergo minor changes during the approval process by lawmakers, as Antonio Tajani, leader of Forza Italia, has expressed the desire to water it down and propose amendments.
The announcement of the bank tax on August 7 took investors by surprise, causing domestic banks to lose $10 billion in market value initially, before recovering. The government then revised the measure, stating that the tax would be capped at 0.1% of the banks' assets. The funds generated from the tax will be allocated to a special fund aimed at assisting families and consumers in mitigating the impact of rising interest rates. This could provide some financial relief for Italy if its revenue targets are not met, helping to stabilize the country's fragile finances.
According to Bloomberg News calculations based on the assets of Italy's five largest banks, the cost of the tax for these institutions could exceed €2 billion. Unicredit SpA and Intesa Sanpaolo SpA are expected to bear the brunt of the tax.
While the government is determined to avoid further dilution of the tax, there is still the possibility of introducing some minor changes to limit disruption to banks and satisfy Forza Italia. Specific details regarding the assets subject to the tax, such as whether the cap will apply only to Italian assets, still need clarification. Additionally, discussions are underway regarding the potential for making the levy partially tax-deductible.
The opposition from Forza Italia regarding the bank tax does not pose a threat to the stability of Meloni's coalition government, according to several party officials. In fact, the tight alliance between Meloni and Matteo Salvini, leader of the League party, on the decision to impose the tax may actually strengthen government unity.
Although the tax is already in force through an official decree, it still needs to be converted into law in the fall.