The European Central Bank is set to send a letter of complaint to the Italian government about a 40% windfall tax on extra profits announced in a surprise move last week, Corriere della Sera reported Friday, a move which would escalate the clash between Rome and the institution.
The euro-zone central bank, which according to the report was not informed about Italy’s decision, will write to Giorgia Meloni’s government to outline its doubts, Corriere said, adding the ECB’s complaints will be similar to ones expressed toward other European governments that have introduced windfall levies.
While the ECB doesn’t have the power to interfere in domestic fiscal decisions, such a letter is likely to be met with protests from the Rome government, which has repeatedly attacked the central bank over its rate hikes.
Still, Italy — which wrong-footed investors when it unveiled the tax on Aug. 7, erasing an initial $10 billion in market value from domestic banks before they recovered — would not be the only country to get such a rebuke. When Spain announced a tax on banks, the ECB also criticized the measure.
An ECB complaint on the bank tax feeds into the narrative of investor and market anger over the surprise move by Meloni’s government, which was fast-tracked in a late evening cabinet meeting before the summer break.
After the initial announcement, the government partially backtracked, saying the measure would be capped at 0.1% of lenders’ assets. Italy is counting on receiving as much as €3 billion ($3.3 billion) from its the tax, Bloomberg reported on Thursday.
The ECB didn’t immediately answer messages seeking comment.
--With assistance from Nicholas Comfort.
(Updates with details and context)
