CashNews.co
By Giuseppe Fonte
ROME (Reuters) -Italy is negotiating with its domestic banks on the terms of a contribution from them to provide additional cash for state finances, the government told trade unions and business lobbies on Wednesday.
“Economy Minister Giancarlo Giorgetti is working on some proposals as he negotiates with banks,” UIL leader Pierpaolo Bombardieri said at the end of the meeting.
The country’s banking association ABI said it would consider some “temporary” measures in line with the government’s requests, saying any scheme would not be retroactive and would not affect banks’ earnings or balance sheets.
Rome sparked a sell-off in banking shares in August 2023 by announcing a shock 40% tax on income banks had pocketed from higher interest rates.
The government was later forced to backtrack and eventually introduced an opt-out clause that meant the measure yielded no proceeds.
This time it seems to want to move in agreement with the sector.
Officials from Prime Minister Giorgia Meloni’s office ruled out a tax on extra profits and said they hoped for help from firms operating in sectors benefiting from unspecified “particularly favorable conditions.”
This suggests that also insurers and non-financial companies such as energy groups will be asked for help.
Giorgetti confirmed the goal of bringing the deficit below European Union’s 3% of GDP ceiling in 2026, other people who attended the meeting added.
Italy was put under a so-called Excessive Deficit Procedure by the EU this year, as its 2023 headline deficit came in at 7.2% of GDP.
Adding to the challenge, in its 2025 budget Rome needs to comply with the latest reform of the bloc’s fiscal rules, which requires a slow but steady pace of headline deficit and debt reduction from 2025 over four to seven years, depending on commitments regarding reforms and strategic investments.
Despite the commitment to rein in the fiscal gap, the government told unions it aimed to keep in place temporary cuts to social contributions and tax cuts for low and middle-income earners.
Both measures are currently in place until December and make them permanent will cost state coffers about 15 billion euros ($16.73 billion) per year.
The government does not intend to cash in by cutting pensions or increasing the statutory retirement age, Giorgetti said according to Bombardieri.
A temporary regime that this year allows people to retire if they are at least 62 years old and have worked for 41 years will likely be extended to 2025, trade unionists said.
($1 = 0.8964 euros)
(Editing by Keith Weir and Hugh Lawson and Giselda Vagnoni)