Italy’s Meloni defends windfall tax move against banks
Italy’s prime minister, Giorgia Meloni, has doubled down on a shock decision to introduce a 40% windfall tax on banks, saying she would “do it again” despite having sent lenders’ shares plunging last week.
The leader of the rightwing Brothers of Italy party told Italian newspapers on Monday that implementing the tax was the right decision for her government, which is the latest to target banks accused of profiteering at a time of high interest rates.
“I would do it again. Because I believe that the right things must be done … This is a decision that I took [alone]”, Meloni told the Italian newspaper La Repubblica. “It’s a sensitive issue and I take full responsibility for it.”
Italy is not alone in targeting banks with a windfall tax: similar decisions have been taken by the Czech Republic, Lithuania and Spain in recent months. Their aim is to target bank profits, which have soared in recent quarters as rising interest rates have allowed banks to charge borrowers more for loans and mortgages while most have failed to raise savings rates at a similar pace.
Italy’s attempt to take a slice of those profits spooked investors and sent shares in local lenders including Intesa Sanpaolo plunging last Monday. The reaction forced the government to water down elements of its scheme less than 24 hours after it was announced, saying it would cap taxes at 0.1% of banks’ assets, compared with analysts’ initial estimates of 0.5%.
The financial services firm Jefferies said the windfall tax would limit collective payouts from some of Italy’s largest listed banks, which account for about 50% of Italian deposits, to about €2.5bn (£2.2bn), instead of earlier estimates of up to €4.9bn.
Campaigners and some backbench MPs in Westminster have called for similar taxes in the UK, where banks are still facing criticism for failing to pass on interest rate rises to savers.
Positive Money, a campaign group, said replicating Meloni’s windfall tax could result in £3.4bn being raised for UK taxpayers from the big four banks – Lloyds, NatWest, Barclays and HSBC’s UK operations – based on profits earned in the first half of 2023 alone. Following in the Czech government’s footsteps by introducing a 60% tax on bank profits exceeding 120% of their average between 2018 and 2021 – could raise nearly £11bn, the group estimated.
Geoff Yu, a UBS strategist, said any government considering new taxes on banks should learn from Italy’s mistakes. “What Italy unveiled last week is
perhaps a good example of how not to proceed. The last-minute windfall tax … was very poorly communicated to markets and comes amid the end of the widening phase for net interest margins in the European banking sector,”
we wouldn’t have been on Blackground. She spoke up for Tim and me and Barry ended up signing us … Aaliyah vouched for us and I never forgot that.”
The duo’s debut album, Welcome to Our World, was released in 1997, featuring guest appearances by Missy Elliott, Aaliyah and Ginuwine. Certified Platinum in the US, its most successful single, Up Jumps Da Boogie, featuring Elliott, peaked at No 12 on the Billboard Hot 100.
“I never really got the chance to enjoy the success because it came at a cost,” Magoo said, recalling a blur of video shoots and flights. “I’m going to keep it real, I didn’t enjoy any of that. I never felt like me and Tim got a chance to enjoy our early years and it never even felt like we were this million-selling group. Not just from a financial standpoint, but more so because you’re always working. You go from that album and then they want another one and then you have people trying to rip you apart.”
Magoo was sometimes subject to derisory comments about his rapping and what he described as his “light” voice. He admitted that “he wasn’t trying to be a dope MC” but aimed to create catchphrases “that would make people remember what I said because I knew people forget rappers all the time. There are some dope rappers that were 10 times better than me, but nobody knows they exist.”
The pair’s second album, Indecent Proposal, released in 2001, featured musicians including Jay-Z, Ludacris and Tweet, while Under Construction Part II, released in 2003, featured the likes of Brandy, Bubba Sparxxx, Wyclef Jean and Beenie Man.
While Timbaland became one of the defining music producers of the era, Magoo stepped back from the spotlight after the release of the duo’s final record.
“I enjoyed it more once it was over and I still didn’t enjoy it,” he said. “That’s why I walked away from it … When I had a No 1 song, I realised I may have been better with my 9-5 before I left Virginia. It’s hard to be happy because you’re fighting for everything you earned and you just don’t have time to enjoy it with your family. You aren’t as close with friends anymore and people are treating you different once you have that hit record. I lived two different lives and being a celebrity wasn’t fun.”
In 1997, he had told Billboard magazine that he couldn’t conceive of embarking on a solo career without Timbaland. “It would be really difficult for me to think about doing a record without him … Tim and Magoo is more a friendship than it is a group.
After leaving music, the only part he missed, Magoo told YouKnowIGotSoul, was “making songs with my homeboy”.