Italy targets banks in revenue hunt for 2027 budget

Italy Considers €3 Billion Bank Levy to Fund 2027 Budget Initiatives

Proposed Bank Levy and Political Reactions

By Giuseppe Fonte

Bank Contribution Proposal

ROME, Sept 8 (Reuters) - Italian banks should contribute up to €3 billion euros ($3.49 billion) to help the government fund tax cuts and spending hikes in next year's budget, the co-ruling League party said in a statement on Tuesday.

Details of the Levy

A 5% levy (on profits) could generate between €2 and €3 billion in funds to be allocated to supporting families and businesses and to strengthening security measures, the right-wing party said.

The League issued the statement on the sidelines of a conference on the priorities of the upcoming budget, to be presented next month.

Justification and Industry Impact

Economy Minister's Rationale

Economy Minister Giancarlo Giorgetti, a leading League member, justified higher taxation on banks by saying the sector was affected by rents and low competition.

"Is there competition among them? Or is it that the struggling entrepreneur can no longer find anyone offering competitive terms for loans?," he said at the conference.

"How long does it take and how much does it cost a struggling retiree to transfer an account from one bank to another? "If you introduce some elements of competition, you’ll see that certain systemic rents change," he said.

Background on Bank Profits

The minister has repeatedly said in recent years that banks' large profits mainly stemmed from European Central Bank interest rate hikes and state guarantees on loans issued by previous governments in the wake of the COVID-19 pandemic.

Political Reactions and Additional Measures

Coalition Tensions

The proposal to seek cash from the financial sector has met resistance from one of the League's coalition allies, the more centrist Forza Italia party led by Foreign Minister Antonio Tajani, triggering tensions in Prime Minister Giorgia Meloni's ruling alliance.

Tajani said this month the terms of any contribution should be agreed with the affected companies and take the form of advance tax payments rather than new levies.

Other Revenue Sources

The €2-3 billion proposed by the League would come on top of some €12 billion the government already aims to garner from Italy's banks and insurers through 2028, thanks to a package of measures contained in the 2026 budget. These include a higher tax band for the IRAP corporate tax.

The League also said major energy groups should help fund government efforts to soften electricity, gas and fuel prices.

Budget Timeline and Context

Next year's budget will be the last under Giorgia Meloni's government before national elections.

($1 = 0.8603 euros)

(Editing by Gavin Jones)