Windfall tax would have negative impact on economy – ABI – English

(ANSA) – ROME, SEP 12 – The introduction of a windfall tax on
surplus profits that Italy’s banks are making following the
European Central Bank’s interest-rate hikes would have a
negative impact on the Italian economy, Italian banking
association ABI chief Giovanni Sabatini told parliament on
Tuesday.

   
“Unjustified penalisations of the banking sector would lead to a
lower capacity for (creating) reserve funds and financing for
businesses and households and would limit investors’ interest in
the Italian banking sector, which would ultimately reflect on
the entire Italian economy,” said Sabatini during a Senate
committee hearing on the surprise controversial ‘assets’ decree
introducing the measure last month.

   
“The announcement of the decision, without any prior discussion
even with ABI, to introduce the one-off extraordinary tax” on
banks “had an impact on the financial markets that has since
only partially been mitigated”, continued the ABI chief.

   
“The introduction of this extraordinary tax has damaged the
trust placed in the Italian financial market,” he added.

   
The announcement in early August of a new 40% windfall tax on
banks’ surplus profits caused immediate stock market turmoil.

   
The losses were partially reversed after the government said the
windfall tax would be capped at 0.1% of institutes’ assets, but
skepticism remains, with Moody’s saying the measure is “credit
negative” and the Financial Times
describing the move as “disastrous” and the government’s
“biggest blunder so far”.

   
Sabatini also told senators the windfall tax is based on a false
assumption since there is no such thing as extra profits in the
banking sector.

   
“The term extra-profit refers to a specific situation, one in
which a company enjoying a monopoly or oligopoly position can
set the price of its products by earning a profit higher than
that which could be determined in a competitive market
environment,” said the ABI head.

   
This situation, he added, is absent in banks, which are “in
strong competition throughout the euro area and with Fintech and
Big Tech (companies)”.

   
Premier Giorgia Meloni has repeatedly defended the windfall tax,
most recently at an assembly of her right-wing Brothers of Italy
(FdI) party on Tuesday.

   
On that occasion, she dismissed criticism of the measure, saying
it was an act of courage.

   
“I defend that measure, which has no intent to punish. It is a
just regulation,” Meloni said. (ANSA).