Italian Prime Minister Giorgia Meloni broke the silence she’d observed for almost two days, backing her government’s decision to pass a 40% levy on banks’ extra profits.
Meloni stood by the tax as “the most important” measure approved by her cabinet late Monday. She called the income earned by banks on rising European interest rates “unfair margins,” in a video message posted Wednesday on Facebook.
The tax is a consequence of lenders’ bad behavior of benefiting from higher interest rates without helping clients, Meloni said.
The surprise announcement of the new norm by Deputy Premier Matteo Salvini led to a market rout which initially wiped out $10 billion from banks’ market value. Shares have recovered in part after the government clarified that it would introduce a cap to limit the impact for many lenders.
Meloni also took a jab at the European Central Bank saying the “efficacy” of raising rates “is questionable.”
The government has repeatedly attacked the ECB for raising rates and damaging the economy, and Deputy Premier Antonio Tajani said earlier this week that the new tax was an “inevitable consequence” of the ECB’s rate increases.
The levy, which Salvini said would bring in several billion euros, will help the government finance electoral promises to its populist base including tax cuts and support for mortgages for first-time owners. However, the move requires approval by parliament, and could be changed. It could also be challenged in the courts, like a similar measure in Spain.
--With assistance from Antonio Vanuzzo.
