Meloni modifies its banking tax after ECB warnings

Update Post: November 28, 2023 9:58 pm

Date: September 25, 2023 Time: 23:04:58

The Italian Government has modified the preparation of the extraordinary tax to limit the amount to be paid by entities, but chooses to exempt itself from payment if they increase their capital reserves. The proposed amendments, which must still be approved by Parliament, limit the tax to 0.26% of individual risk-weighted assets, and not 0.1% of the bank’s total assets.

Likewise, entities will be able to avoid paying the fee if they allocate up to two and a half times the amount due to reinforce their CET1 capital ratio, the highest quality. However, if these reserves are subsequently used to distribute dividends, the tax plus the debt maturity must be paid.

The rate will continue to apply to 40% of banks’ extraordinary profits, measured by the differential in net interest income between 2021 and 2023 with a profit greater than 10%.

Case income 3,000 million

The new amendment has been designed in such a way that it reports to the State an amount equivalent to that provided for by the original tax, which is why the Executive of Prime Minister Georgia Meloni anticipates revenues close to 3,000 million euros.

In this way, the measure points to a compromise within the right-wing coalition that supports the Meloni Government, since its minority partner, Forza Italia, had positioned itself against the tax.

Likewise, in the middle of this month, the European Central Bank (ECB) questioned different aspects of the tax, considering that the tax could endanger the fluid transmission of monetary policies, adding that its import could not be proportional to the profitability of the entities nor will it affect all of them equally.

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September 25, 2023 5:04 pm