The Italian government has modified its controversial plan to impose a tax on banks’ extraordinary profits, after facing widespread criticism, particularly from the European Central Bank, Italian press agencies reported on Saturday.
Banks will be able to choose between paying the tax or increasing their non-distributable reserves (reserves that cannot be paid out as dividends) by an amount equal to two and a half times the tax, according to a proposed amendment. The amended text must be approved by Parliament and could still change.
ECB warning
Prime Minister Giorgia Meloni’s far-right government announced last month that it would impose a 40% flat tax on banks’ “excess profits” resulting from the ECB’s series of interest rate increases over the past year.
The shocking move spooked investors and sent shares in Italian banks tumbling before the government watered down the plan, saying the new tax would be capped at 0.1% of the bank’s assets. In a legal opinion on September 13, the ECB warned that the tax could reduce lenders’ capital reserves and make them more vulnerable to future economic crises.
Source: BFM TV
