The European Central Bank (ECB) will send a letter to Italy expressing objections to the government’s sudden tax on bank profits, reported the daily Corriere della Sera on Friday.
In the letter, the ECB will criticize the fact that Rome announced the introduction of the tax last week without prior notification to the Italian central bank or the ECB, as should be done according to EU rules, the Italian newspaper reported without citing sources.
This tax risk would weaken Italian banks and the economy in general, the ECB will emphasize in the letter, which will be sent no later than “in a few weeks,” according to the article in Corriere della Sera.
As a reminder, in an effort to solidify its political base, the Italian conservative government announced last Monday a surprising decision to impose a one-time additional tax of 40 percent on large bank profits, triggering significant sell-offs of bank stocks, not only of large Italian banks but also of other banking giants in the eurozone.
Then, less than 24 hours later, it partially backtracked, clarifying that the maximum amount of tax that banks will pay will be 0.1 percent of the value of their assets.
The one-time tax is levied on the strong profits that banks have made due to rising interest rates. Reuters learned at the time the measure was announced that the Italian Ministry of Finance would collect just under three billion euros from this tax. However, before the clarification on the introduction of a maximum limit for taxation, calculations indicated significantly higher amounts.
