The move comes in the wake of a series of interest rate hikes by the European Central Bank. Italian bank shares fall after tax surprise.
Italian Prime Minister Giorgia Meloni and Deputy Prime Minister Matteo Salvini will collect some of the extra income the banks have left over from the interest rate increases. Photo: Gregorio Borgia / APPPublished:
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Italy’s government on Monday approved a new additional tax on banks’ profits.
A 40 per cent tax will be introduced on the banks’ net interest margins, writes, among other things Reuters. The tax only applies to 2023.
The introduction of the tax comes after the interest rate has been raised many notches in the past year, and helped to increase the banks’ profits sharply.
The European Central Bank last raised interest rates in July. That took the interest rate level in the eurozone to 3.75 percent, the highest since 2001.
The money Italy receives from the tax will, among other things, be used to cut other taxes and help those applying for loans for the first time, Deputy Prime Minister Matteo Salvini said when he presented the tax on Monday evening.
– You only need to look at the banks’ profits in the first half of the year to understand that we are not talking about a few million, but billions, Salvini said according to Reuters.
The right-wing Italian government has both criticized the European Central Bank for raising interest rates as it has done, and criticized Italian banks for not passing on more of the higher interest income to those who have deposits in the banks.
Italian bank shares fall after the news. The Sanpaolo share is down 6.9 per cent, while Unicredit falls 5.4 per cent at 10.45am.
Analysts at Bank of America estimate that the tax will take 2-9 percent of the profits of the banks, according to Reuters.
According to Bloomberg, Luigi Tramontana, analyst at Banca Akros, believes that the Italian authorities can collect more than two billion euros from the tax. He estimates that the tax will have an average effect of seven percent on the banks’ earnings.
2023-08-08 08:45:21
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