The Italian government has changed its controversial proposal to tax extraordinary bank profits after several criticisms, especially from the European Central Bank (ECB), Italian news agencies reported on Saturday.
Under the proposed amendment, banks would 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 equivalent to two and a half times the tax, according to the proposed amendment.
Changes to the text must be approved by Parliament and may undergo further changes.
The far-right government led by Giorgia Meloni announced in August that it would apply a flat rate of 40% to banks’ “excessive profits” resulting from the ECB’s interest rate hikes since last July.
The decision caused shares of Italian banks to plummet, and two days after the announcement the government clarified that the new tax on banks “provides for a maximum deposit limit that cannot exceed 0.1% of total assets”, a level significantly lower than originally assumed.
On the 13th, the ECB warned of the impact of the tax, especially on institutions’ capital levels or reserve formation, and the risk of greater fragmentation of the European financial system.
Author: Lusa
Source: CM Jornal
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