Italy’s ruling coalition League party has proposed that domestic banks should make a significant contribution to the country’s upcoming 2026 budget. The party, led by Deputy Prime Minister Matteo Salvini and supported by Economy Minister Giancarlo Giorgetti, said in a statement on Saturday that Italian banks should contribute around €5 billion ($5.85 billion).
The plan, inspired by windfall tax measures already used in other European nations, aims to tap into what the League describes as the “excess profits of major credit institutions.” In recent years, Italian banks have posted record earnings, driven by rising interest rates and robust lending activity, which the League argues justifies asking them to help strengthen state finances.
Speaking earlier this month, Giorgetti highlighted the banking sector’s soaring profits:
“The Italian banking sector has recorded stratospheric profits over the past five years. It is only fair that such gains contribute to the country’s economic stability.”
This is not Italy’s first attempt to target banks through windfall taxation. Back in 2023, the government introduced a controversial 40% windfall tax on bank profits. The measure, however, backfired almost immediately, triggering a sharp selloff in Italian banking stocks and undermining market confidence. Facing mounting criticism, the government was forced to water down the plan significantly.
The new League proposal is expected to be more cautious in structure, but political resistance remains. Coalition partner Forza Italia has already voiced opposition to any fresh windfall tax on the banking sector, warning it could discourage investment and destabilize markets. Tensions inside the cabinet may therefore complicate the proposal’s chances of being included in the final 2026 budget.
Observers note that the League’s move fits within a broader European trend, where governments have looked to the financial sector to fund public spending. Spain, Hungary, and other EU nations have already implemented variations of windfall taxes targeting banks and energy companies. In Italy’s case, however, the challenge will be striking a balance between boosting revenues and maintaining confidence in the financial system.
If implemented, the proposed €5 billion contribution could provide the Italian government with a valuable source of funding at a time when it faces growing pressure to meet budgetary targets while addressing economic challenges, from slowing growth to the lingering impact of higher borrowing costs.
The coming weeks will be crucial as negotiations intensify within the coalition. Whether the League can push through its proposal will depend not only on internal cabinet consensus but also on how financial markets react to renewed talk of taxing banks.
