New development in Italy’s surprise tax decision

Italy has set a new upper limit on the surprise tax on banks. The government in Rome, in an announcement late yesterday, capped the tax to just 0.1 percent of total bank assets.

The change comes a day after the government announced a 40 percent tax on banks on their massive profits from rising interest rates. Following yesterday’s decision, stock markets fell sharply, led by bank shares.

THE LIMITATION ARRIVED

After the panic in the stock market, the Treasury, in an announcement made late yesterday in order to relieve the markets, said that the income that will be obtained from the tax will not exceed 0.1 percent of total assets of the banks.

According to sources and calculations by analysts in Rome, tax revenue is expected to remain below 3 billion euros.

SHARES RISE AGAIN

Following the decision, European stock markets also rallied after yesterday’s heavy losses, as the Italian government softened its stance on new bank taxes. Shares of Italian banks including Intesa Sanpaolo, Banco BPM and UniCredit rose between 1.7 and 2.5 percent.

The STOXX 600 Index, which tracks Europe’s largest companies, rose 1 percent to a one-week high. The shares of banks in the euro zone rose 1.4 percent today, with the new step of the Italian government, after falling 3.5 yesterday.