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(Bloomberg) — Italy plans to raise taxes on the companies that benefitted most from the economic turbulence of recent years in order to help bring down the country’s budget deficit, Finance Minister Giancarlo Giorgetti said.
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Giorgetti said that he is looking at new levies that would apply to companies in a number of different industries, without offering any further detail. Italy’s benchmark stock index fell as much as 1.5%.
The 57-year-old finance chief faces a delicate balancing act trying to persuade Italian executives to accept his plans without provoking a public backlash. Last year, plans to impose an extra tax on banks were effectively abandoned after they triggered a major selloff in Italian stocks and Giorgetti promised there will be not a repeat of that mistake.
“We will be approving a budget that will require sacrifices from everyone, which means taxing extra profits,” he said in an interview that was pre-recorded for Bloomberg’s Future of Finance event in Milan on Thursday. “It means taxing profits made and revenues made, and it is an effort that the whole country must undertake which means individuals, but also small, medium and large companies.”
Italy is aiming to bring its budget deficit below 3% of economic output in 2026 from a planned shortfall of 3.8% this year. That’s necessary to keep the country in line with the European Union’s newly reinstated fiscal rules and to reassure markets after it was reprimanded by the EU and put into a special monitoring regime.
The minister also emphasized Italy’s commitment to maintaining stable public finances and confirmed that the government sees the economy growing 1% this year.
“I believe credibility is fundamental, and this government has to give a message of credibility,” he said. “We do what we promise, and I believe facts are what prove this.”
Still, Giorgetti is also struggling to find the revenue he needs to deliver on his budget targets for next year. He needs to find around €25 billion ($28 billion) of savings and has so far managed to find only about half of that, Bloomberg has previously reported.
Adding to his problems, Prime Minister Giorgia Meloni has pledged to cut taxes on wages next year and maintain subsidies for lower income families. She has repeatedly said that it’s not only down to the government to help poorer households and has singled out companies that profited from a high-interest-rate environment — an obvious nod to banks — as candidates for making a bigger contribution to the public finances.
But Giorgetti insisted that Italian lenders won’t be singled out under his new plans. The defense industry is another that has seen profits jump, in its case as a result of the war in Ukraine, Giorgetti said, emphasizing that any measures will be consistent with the government’s powers under the Italian constitution.
“There will be a general call for everyone to contribute, not just banks,” he said. “It will be reasoned and rational.”
–With assistance from Donato Paolo Mancini.
(Updates with market reaction in second paragraph.)
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