The European Central Bank is set to send a letter of complaint to the Italian government about a 40% windfall tax on extra profits announced in a surprise move last week, Corriere della Sera reported, a move that may intensify frictions between Rome and Frankfurt.
(Bloomberg) — The European Central Bank is set to send a letter of complaint to the Italian government about a 40% windfall tax on extra profits announced in a surprise move last week, Corriere della Sera reported, a move that may intensify frictions between Rome and Frankfurt.
The euro-zone central bank, which according to a finance ministry statement was only informed about Italy’s plans three days after it was approved, will write to Giorgia Meloni’s government to outline its doubts, Corriere said.
While the ECB doesn’t have the power to interfere in domestic fiscal decisions, such a letter is likely to be met with protests from the Rome government, which has repeatedly attacked the central bank over its interest-rate hikes.
Still, Italy — which wrong-footed investors when it unveiled the tax on Aug. 7, erasing an initial $10 billion in market value from domestic banks before they recovered — would not be the only country to get such a rebuke. When Spain and Lithuania announced similar windfall levies on banks, the ECB also criticized the measures.
Asked for comment on the Corriere report, the ECB said that it received an official consultation request from Italy and “will publish the ECB opinion in due course.”
In a statement later Friday, Italy’s Finance Ministry said the government requested an ECB assessment on Aug. 10, the date when the law was officially published and entered into force.
An ECB complaint on the bank tax feeds into the narrative of investor and market anger over the surprise move by Meloni’s government, which was fast-tracked in a late evening cabinet meeting before the summer break.
After the initial announcement, the government partially backtracked, saying the measure would be capped at 0.1% of lenders’ assets. Italy is counting on receiving as much as €3 billion ($3.3 billion) from its the tax, Bloomberg reported on Thursday.
–With assistance from Nicholas Comfort.
(Updates with Finance Ministry statement in sixth paragraph.)
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