TAX NEWS - 2010

Italy Tax: Italian Bank Chief Open To Financial Tax

Corrado Passera, Managing Director and Chief Executive Officer of Intesa Sanpaolo, the large Italian banking group, has disclosed that he would not be totally against the imposition of a marginal tax on banking transactions in Italy.

While ABI, the association of Italian banks, had recently come out against the introduction of a banking levy, irrespective of its final form and rate, Passera has accepted that a transaction tax may be a necessary evil, as long as it is set at a very low rate, and is applied to all types of transactions, so as not to distort financial markets.

He added, however, that, while it was understandable that some European governments, which had provided considerable funds to support to their domestic banks, should now be looking to introduce new banking taxes to compensate for their action, the Italian banking system had never called on the Italian government for public funds. He was not, therefore, advocating a tax which would be equal for all countries, as there was an obvious disparity between systems.

In addition, he said that it should be remembered that there were European countries where the taxation of banking profits was low, at less than 20%, and there were those where such taxation was high, at above 40%. He pointed out that talking of increases to taxation on their banks was easier in the first group of countries, but, unfortunately, Italian banks were situated in a country in the second group (having an effective tax rate of 44%, according to ABI).

He also suggested that there was scope to look closer at the disparities in Italy between the taxation of the various types of financial income. While he stressed that he was not attacking the tax breaks available on interest income from Italian government bonds (that are not available on bank deposits), he did point out that capital gains tax, for example on shares, remains relatively low in Italy.