Italy’s far-right government has given the green light to a budget for the upcoming year amounting to approximately 30 billion euros, or $33 billion, with plans in place to partially finance it through a levy imposed on Italian banks and insurers. Prime Minister Giorgia Meloni announced on Tuesday that the government anticipates generating around 3.5 billion euros from these financial institutions to enhance public services, particularly the struggling health sector, and provide support for the most vulnerable members of society.
Meloni reassured the public that no additional taxes would be imposed on citizens, a promise reiterated in a social media post. The 2025 budget legislation was finalised during a late-night cabinet meeting on Tuesday, just meeting the deadline for submission to the European Union. The proposed measures are now awaiting approval from the Italian parliament, with a final vote anticipated by the year’s end.
Amidst mounting pressure, Economy and Finance Minister Giancarlo Giorgetti worked to balance the necessity of accelerating Italy’s deficit reduction – closely monitored by the EU – with the government’s costly electoral commitments. Giorgetti described the levy on banks and insurers as a necessary sacrifice and expressed that it would not be a burden on the markets.
The specifics of the new financial levy have not been disclosed by government officials, although there are reports indicating a focus on eliminating deductions for lenders’ deferred tax assets temporarily and increasing taxes on bankers’ stock options. Additionally, a “spending review” is set to be implemented across Italian ministries to identify potential spending cuts.
The budget for 2025 also includes permanent reductions in income tax and social contributions for middle- and low-income earners, aligning with one of Meloni’s key electoral promises. To fund these initiatives, Italy plans to widen next year’s deficit to 3.3% of the gross domestic product from an estimated 2.9%.
Rome faces pressure to maintain fiscal discipline after being placed under special monitoring by Brussels for exceeding the EU’s 3% deficit limit and failing to reduce its substantial debt, currently approaching 3 trillion euros. The government aims to strike a delicate balance between meeting financial obligations and fulfilling electoral pledges as it navigates economic challenges and pressures from the EU.