FRANKFURT, September 13 (Reuters) – The European Central Bank (ECB) on Wednesday criticized the proposed exceptional tax on bank profits approved a month ago by Italy, saying it did not take into account the prospects for long term on the sector and could leave certain banks vulnerable to an economic slowdown.
“The amount of the extraordinary tax may not be proportional to the long-term profitability of a credit institution and its capacity to generate capital,” the ECB said in a non-binding legal opinion.
“Due to the general application of the extraordinary tax, credit institutions with lower solvency or more focused on lending activity (such as small banks) or whose capital projections are “difficult conditions could be less able to absorb the potential risks of a downturn in the economic situation,” added the ECB.
Italian parliamentarians are expected to present proposals this week aimed at softening the impact of the tax, including by allowing banks to deduct what they have to pay from their overall corporate tax bill.
Other amendments could revise the tax cap by anchoring it on risk-weighted assets instead of total assets, according to ruling politicians. (Reporting Francesco Canepa and Giuseppe Fonte; French version Augustin Turpin, edited by Blandine Hénault)
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