MNI: Italy To Tap Banks To Close EUR1 Bln Budget Gap -Sources

The Italian government is looking into ways to raise an extra EUR1 billion from commercial banks to close a gap in its 2026 budget law gap which has opened up due to amendments made during its passage through parliament, sources close to the matter told MNI. 

Rome already raised taxes on lenders in October, which it expects will produce revenues of up to EUR 11 billion over the next three years, following negotiations with the banking sector. Now the government is thinking of increasing a regional production tax on banks and insurance companies from 2% to 2.5%.

Discussions are still ongoing, but the government wants to excuse small institutions from the levy, a government source told MNI.

Just as was the case with the previous three budgets under Prime Minister Giorgia Meloini, the proposal sent to parliament had only very limited margin for change, and a parliamentary source said that lawmakers seeking to prove themselves useful to constituents had become frustrated. This time, legislators managed to force Finance Minister Giancarlo Giorgetti to back down from a planned increase in taxation on short-term rental properties, opening up the gap. (See CORRECTS-MNI: Italy To Keep Lower Tax Rate For Stablecoins)

APPROVAL BEFORE END OF THE YEAR

“This is the last budget law which will have an impact on citizens before the election because the next one will be too close to the next vote. Normally you are more generous in these ones, but we had to prioritise fiscal consolidation,” the government official said, adding that it is crucial that Italy limits its budget deficit to 3% of GDP this year and keeps it below that level in 2026 in order to leave the European Union’s Excessive Debt Procedure in the spring.

Work on the budget law is expected to continue into December, and it needs to be approved by both chambers before the end of the year.

The government has one clear red line as it seeks to raise more funds.

 “We will not increase taxes on people. This I can assure you,” the official said.