Italian PM defends controversial bank tax despite market backlash

On Monday, Italian Prime Minister Giorgia Meloni said she took "full responsibility" for last week's shock decision to impose a one-off bank tax.
FILE PHOTO: Italy's Prime Minister Giorgia Meloni looks on, as she is welcomed by U.S. President Joe Biden (not pictured), in the Oval Office at the White House, in Washington, U.S. July 27, 2023.
FILE PHOTO: Italy's Prime Minister Giorgia Meloni looks on, as she is welcomed by U.S. President Joe Biden (not pictured), in the Oval Office at the White House, in Washington, U.S. July 27, 2023. REUTERS/Jonathan Ernst/File Photo

MILAN (Reuters) - Italian Prime Minister Giorgia Meloni on Monday said she took "full responsibility" for last week's shock decision to impose a one-off bank tax that has been criticised for causing lasting damage to her government's credibility with financial markets.

In comments to Italian newspapers Corriere della Sera, la Repubblica and La Stampa, Meloni said the 40% levy had no punitive intentions towards the sector.

"I would do it again. Because I believe that the right things must be done...This is a decision that I took (on my own)", she was quoted as saying by la Repubblica.

"It's a sensitive issue and I take full responsibility for it," she added.

In a drive to shore up its political base, Italy's conservative government unveiled the surprise decision late last Monday, only to backtrack in part by clarifying there was a cap on proceeds 24 hours later - and after having changed the threshold to apply the tax in the meantime.

The new tax hits the increase in banks' net interest income for 2022 or 2023, versus 2021, above certain thresholds.

Sources told Reuters when the measure was announced the Treasury expected to draw less than 3 billion euros ($3.3 billion) from the tax. However, prior to the clarification on the cap some analyst calculations had put proceeds at up to 9 billion.

(Reporting by Claudia Cristoferi, editing by Federico Maccioni and Valentina Za)

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