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Italian prime minister Giorgia Meloni said her government is planning to raise €3.5bn from banks and insurance companies as it seeks to plug a €9bn gap in its budget.
Following a cabinet meeting on Tuesday night, Meloni wrote on X that the government had kept its commitment to “place citizens at the centre” and that the extra funds received from companies would be used to finance the public health system and improved services for those in need.
Details of the contributions were not immediately clear.
However, earlier on Tuesday people briefed on talks between banks and the government said discussions had focused on temporarily removing deductions for lenders’ so-called deferred tax assets (DTAs), and increasing the tax on bankers’ stock options.
Deferred tax assets give banks the right to pay less tax in the financial year in which the cost that generated them becomes deductible. Under the plans, banks would have to entirely postpone such deductions for 2025 and 2026. The deductions would only be partial for 2027 and 2028.
Meloni’s comment on X suggests the same measures are likely to apply to insurance companies.
A government spokesperson declined to comment on the details of the measures targeting financial companies.
Finance minister Giancarlo Giorgetti is due to hold a press conference in Rome on Wednesday.
The government accelerated plans this week to finalise next year’s complex budget law, which must be scrutinised by parliament before its final approval.
Italy has one of the highest levels of public debt relative to its GDP in the Eurozone. However, it has reduced its budget deficit to 3.4 per cent in 2024 and is targeting a further decline to below 3 per cent, the EU-imposed target, by 2026.
Tensions have simmered within the government over the past few weeks as its members have hurried to find enough funds to keep its costly pledge to cut taxes for lower-paid workers and meet EU demands — which include a €10bn deficit cut next year. Discussions within the government have also focused on spending cuts for government ministries and other public services.
Forza Italia, the liberal junior coalition partner, had strongly opposed new levies on banks and companies but ultimately accepted a compromise on DTAs.
Members of the nationalist League party had argued that banks should bear the brunt, after reaping large profits thanks to the rise in Eurozone interest rates. Banks’ net interest income was boosted by the increase in payments for borrowing, which were not fully passed on to savers.
League leader Matteo Salvini called the outcome “another party victory”.
The government alarmed financial markets last year when it announced a surprise windfall tax on banks, which it was later forced to retract. Giorgetti said this month that the government was in discussions with lenders and that “everyone’s contribution” was needed, though not in the form of a windfall tax.
The Italian banking association, the ABI, said last month that it was discussing with the government ways to contribute to the country’s budget but “measures must be temporary, pre-determined, not retroactive and with no impact on banks’ balance sheets”.
Additional reporting by Giuliana Ricozzi in Rome
https://www.ft.com/content/f0f9c0f3-4efe-456d-a8e9-1994cc7dc65e
