Italian Prime Minister Giorgia Meloni assuaged the concerns of investors over a windfall tax on bank profits, noting that the tax can be adjusted in a number of ways, so long as the government receives the same expected inflow from it.
In an interview with RAI1 television, Meloni said, “If we will need to amend the tax on banks, we will do it as long as the inflows will be unchanged,” adding that the government was expecting to receive just under €3 billion ($3.2 billion).
Meloni’s comments to the popular TV show come just after the European Central Bank issued a warning that the proposed levy could produce potentially negative side effects. The tax plan, which was introduced in August by the government through an emergency decree law, is at present subject to approval by parliament, which allows for it to be amended.
Italian banks have led the declines on the STOXX 600 early Thursday following the comments by the Italian Prime Minister. The worst performer on the STOXX Europe Banks index was BPER Banca SpA which fell as much as 3%. As of 9:15 AM, Intesa Sanpaolo SpA and UniCredit SpA were down over 2%.
Roughly a year after taking office, Meloni is confronting dire economic conditions in Italy just as the first budget law by her government is being prepared. The government’s plan is to finance it in part through a 40% windfall tax on banks’ profits which was announced in the middle of the summer.
The situation has the full attention of investors, as Italy’s 10-year yield lifted to a six-month peak on Wednesday. Since the surprise announcement of the planned levy, it has been climbing steadily.
However as a measure of risk in the region, it is maintaining a more contained premium over German peers, remaining around the 179 basis points it has averaged year-to-date.
Meloni also faces growing tensions with the European Union. She criticized European Commissioner Paolo Gentiloni, who is overseeing economic matters, during the TV show, saying, “He is more critical than collaborative.”
On Wednesday, Meloni once again asked European authorities to hasten the approval for Deutsche Lufthansa AG’s investment in Italy’s carrier ITA Airways. In May, Deutsche Lufthansa AG had committed to purchase 41% of ITA, looking to expand into the third largest aviation market in Europe.
