Italy plans higher taxes on banks to fund tax relief

Italy’s government plans to raise taxes on banks and insurers to help fund tax relief for middle-income earners and self-employed people, as it presented a €26bn package of tax cuts and extra investment for next year.

The budget, presented on Wednesday, would increase the tax rate for banks and insurers by three percentage points, raising more than €5bn. Energy companies are also expected to contribute hundreds of millions of euros more.

Italy’s budget deficit is forecast to reach 3.4 per cent next year, above the European Union’s usual limit of 3 per cent. The government of Prime Minister Giorgia Meloni says it is using an EU exception for spending on defence and climate measures.

The plan would mean workers and self-employed people pay higher taxes only once their income exceeds a higher threshold. It would also make a temporary reduction in vehicle tax permanent and increase healthcare funding.

The budget is the last of Meloni’s current government before elections next year.