Italy turns to banks to balance tight budget

Italian lawmakers adopted a draft 2025 budget late Tuesday financed in part by banks and insurance companies while also offering tax cuts for low-income families, a priority issue for far-right Prime Minister Giorgia Meloni.

"3.5 billion euros from banks and insurance companies will be earmarked for healthcare and the most vulnerable people to ensure better services closer to everyone's needs," Meloni said on X.

An outline of the 2025 budget, because of Italy's membership within the European Union's single currency, must still be sent to Brussels.

As in last year's budget, ministers sought to balance electoral promises with the need to reduce deficits and avoid adding to Italy's mounting debt.

The budget contains measures worth around 25 billion euros, of which banks are expected to contribute "three to four billion euros", deputy prime minister and foreign minister Antonio Tajani has said.

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But he insisted there would be "no new taxes" on the institutions, after the announcement last year of a 40 percent tax on bank "superprofits", made from the rise in interest rates, sparked a backlash on the financial markets.

Tajani, leader of the right-wing Forza Italia party, described the tax -- which was swiftly watered down -- as a Soviet-style levy.

But fellow deputy prime minister Matteo Salvini, from the far-right League, has said that if anyone has to pay more, "let the bankers pay and not the workers".

A government source told AFP late Monday that "there will not be an increase in taxes for individuals and businesses".

Deficit pressure

In place of the windfall tax, the government has considered spreading out tax credits for banks over time and increasing taxes on their executives' stock options.

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Economy Minister Giancarlo Giorgetti had thrown a spanner the works in early October by announcing that the budget "will require sacrifices from everyone", from "citizens and small, medium and large companies".

After a brief reaction on the Milan Stock Exchange, Meloni said there was no desire to increase taxes and promised that "no new sacrifices" would be asked of Italians.

But Italy -- targeted by the European Union for its "excessive" deficits, just like France -- is under intense pressure to balance its books and reduce a debt close to three trillion euros.

The government has committed to reducing the public deficit to 2.8 percent of gross domestic product (GDP) by 2026, below the 3 percent eurozone ceiling.

To curb spending, Rome has urged individual ministries to tighten their belts, to free up around three billion euros in savings.

Ministers were expected to allocate around 15 billion euros to maintain a cut in taxes and social security contributions for those on low incomes, an election issue dear to Meloni.

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© Agence France-Presse

Source: AFP