Giorgetti and Zanetti’s taxing somersaults on the extra profits of the banks
The advice of the tax expert Zanetti (former Monti deputy) for a tax on the extra profits of the banks was not accepted by the Minister of the Economy, Giorgetti, who had also embraced the idea of his adviser… Facts, words and insights. The article by Emanuela Rossi
No tax on the extra profits of the banks will come out of the government hat. The word end to the debate that has also enthralled politicians and trade unions – led by the M5S and CGIL parliamentarians – was put by the Minister of Economy and Finance, Giancarlo Giorgetti, who, however, had some reflections on the hypothesis of putting this tax done. Especially since the idea had arisen right around Via XX Settembre, to be more precise from the study of the minister's adviser, the tax expert Enrico Zanetti .
WHAT GIORGETTI SAID TWO DAYS AGO
Speaking by videoconference at Bloomberg 's "Italy Capital Markets Forum" last Monday, Giorgetti affirmed that the Italian banking system "is solid" even if, as reported by Ansa, it must demonstrate "more flexibility" on current account yields. To add then: "We have no taxation on extra profits in the works".
WHAT GIORGETTI HAD SAID IN THE PAST WEEKS
Last month, however, the head of the economy had shown a certain – albeit timid – openness towards this possible tax. During the question time in the Chamber, Giorgetti had highlighted that "the banks have recorded significant improvements in terms of profitability, thanks to the improvement in the interest margin, as a result of a rapid adjustment to the monetary policy decisions of the ECB of the interest on the credit disbursed to customers, who are not finding an equally diligent adjustment of the interest paid to customers on deposits. This is a dynamic that the government cannot and will not neglect”.
A few days later, during question time in the Senate, the minister seemed to return to the topic: "The Government, taking into account the international context of the financial markets, is looking carefully at the initiatives that the banking sector will implement to mitigate the divergence between the increase in the interest margin on disbursed loans and that on current account yields, in order to guarantee more advantageous conditions, I would dare to say fairer conditions for families”. And again, he assured: "The government remains vigilant on the impact that the restrictive financing conditions are having or could produce, on the housing market and on household savings".
WHAT ABOUT THE BANKS?
The world of credit, on the other hand, had not shown great "sympathy" for this hypothesis. “A possible tax on extra profits is not up to us to decide. The government must propose it to Parliament and then Parliament will decide” was the curt comment – reported by Ansa – by the president of Intesa Sanpaolo, Gian Maria Gros-Pietro, on the sidelines of the Trento Festival of Economics.
In the same location the words of the president of ABI, Antonio Patuelli, rang out very clearly: "'Extra profits do not exist in doctrine, otherwise there would also be extra losses". According to the number one of Palazzo Altieri “we come from a decade of extreme difficulty for the banks in which the banks found themselves facing the problems. If the State could not help the banks when they were in difficulty, it cannot now take advantage of a moment of recovery". Moreover, as reported by the press agencies, Patuelli underlined that “in recent years there have been 12 bank bailouts, 11 against competing banks and one against the State and one bank ended up in the hands of the State. It is good to remember this aspect too”. In short, forgetting what happened in the last period – was the comment of the president of ABI – “is conceptually wrong”.
It is no coincidence that yesterday, following the closure of the economy minister on the tax on extra profits, the applause of Palazzo Altieri arrived. "We greatly appreciated what Minister Giorgetti said, because he highlighted how in this moment in which the prospects, including growth prospects, although more positive than in Italy, do not exclude a series of further risks for the banking sector" said Giovanni Sabatini , general manager of Abi, at the Supervision Risks & profitability. Among these, highlighted the general manager, "a growth in non-performing loans", the need to "increase provisions", "the volatility of the markets" which "also affects the valuation of the securities in the portfolio". “So, if it is true that the results of recent years have seen an improvement in the profitability of the banks, this in perspective still needs to be reconstructed” concluded Sabatini.
ADVISOR ZANETTI'S SUGGESTIONS
As we said, the hypothesis of taxing the extra profits of the banks was born precisely within the MEF thanks to the tax expert Enrico Zanetti, adviser to Minister Giorgetti, former deputy with the Civic Choice of Monti (from 2013 to 2018) and first undersecretary then deputy minister of the 'Economy (from 2014 to 2016).
Since last December 2, with a decree from the Northern League minister who owns the MEF, Zanetti – who has returned to his work as an accountant and statutory auditor – has been Giorgetti's advisor at a gross annual cost of around 75 thousand euros.
In an article published in Eutekne , an online newspaper dedicated to taxation, accounting, economics and law in general, Zanetti wrote: "If this ECB's upward policy is not currently having enormous effects on the front However, inflation is having extremely significant effects on the economic performance of banking institutions”.
The reasoning of the former deputy minister, taken up by Corriere Economia , starts before July 2022 (when the ECB started raising rates) and precisely when the banks – with unilateral changes to contracts – reduced or eliminated interest rates recognized to customers on current account balances. The growth of inflation and the consequent bullish policy of Frankfurt led the lenders to increase the rates on loans, mortgages and current account overruns without however doing the same with the interest on stocks. And the result is record earnings recorded in the first quarter of 2023.
According to Zanetti "it is not easy for the top management of a bank, who have to answer to their shareholders, to voluntarily give up extra profits in the order of tens or hundreds of millions of euros". But help could come from the tax or better from a mechanism that leads the banks to "redistribute" the higher profits. "It is entirely probable that the banks, between giving those extra profits to the State in the form of additional taxation and returning those extra profits to their customers in the form of cancellation of the contractual changes to the detriment of the customers, would choose the second option", was the summary of the Giorgetti's adviser.
Mechanism which, however, evidently did not convince the minister.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/giorgetti-zanetti-extraprofitti-banche/ on Wed, 07 Jun 2023 07:01:06 +0000.