Is it possible to tax windfall profits?

[JohnD]

"Italy’s rightwing coalition has surprised markets by announcing a 40 per cent “windfall” tax on bank profits generated by higher interest rates, sending shares in the country’s lenders tumbling.

Prime Minister Giorgia Meloni’s government has been critical of banks for failing to pass on interest rate rises to small savers, even as they raise lending rates...

The 40 per cent tax, which was approved in a cabinet meeting late on Monday night alongside a flurry of other last-minute measures, will be applied to the net interest income generated from the gap between banks’ lending and deposit rates...

The European Central Bank has raised rates by 4.25 percentage points since last summer, increasing the benchmark deposit rate from -0.5 per cent to 3.75 per cent.The one-off levy, due by the end of June 2024, will only apply if a bank’s net interest income in 2022 exceeded the level recorded in 2021. The measure must secure parliamentary approval within 60 days to take effect.

Italy’s five largest banks have reported aggregate profits of €10.5bn in the first half of 2023, up 64 per cent from a year earlier, according to rating agency DBRS Morningstar. Performance has been buoyed by higher net interest, resilient net fees and strong cost control, it said."

FT.com

 

[JohnD]

"Italy’s move has echoes of the Spanish government’s decision last year to levy a windfall tax on bank profits to finance government initiatives to help consumers hit by the cost of living crisis."

 

[blup]

The response of the market could create much greater problems. All for slicing off some of the super profits but best done to tne utilities and train operators when their contracts/concessions are ending in anticipation of nationalisation.

Blup

 

[JohnD]

much greater problems.

Such as?

 

[blup]

Shares dropping in value leading to a run on the banks, much greater problems.

Blup

 

[ellal]

Shares dropping in value leading to a run on the banks, much greater problems.

So what you are actually saying is let the corruption and money laundering continue?

At least one country let their banks go bust, paid back the debts, and have far lower debt to GDP ratios than the UK...

Could you explain why the monetary model you are referring to is totally carp!

 

[motorbiking]

Did this country let its banks go bust because the debts were mostly to foreign investors?

How did that work out for their financial services industry? Maybe proving blubs point?

 

[blup]

So what you are actually saying is let the corruption and money laundering continue?

At least one country let their banks go bust, paid back the debts, and have far lower debt to GDP ratios than the UK...

Could you explain why the monetary model you are referring to is totally carp!

I'd love to windfall tax the banks, but the italian experience suggests discretion is the better part of valour on this one.

Blup

 

[fillyboy]

I'd love to windfall tax the banks, but the italian experience suggests discretion is the better part of valour on this one.

Blup

It wouldn't take a lot to undermine the European banking sector at the moment, and we wouldn't be immune from contagion.

 

[JohnD]

Shares dropping in value leading to a run on the banks, much greater problems.

Blup

You think that a run on banks is a result of share prices?

What happens to a bank, supported by BoE and HMG, that gets into trouble?

 

[JohnD]

I'd love to windfall tax the banks, but the italian experience suggests discretion is the better part of valour on this one.

Blup

So if they make an extra ten billion as a result of interest rate manipulation, how much should they be allowed to keep?

 

[Mottie]

Anyone on here got shares in European banks in their European investment portfolio?

 

[blup]

You think that a run on banks is a result of share prices?

What happens to a bank, supported by BoE and HMG, that gets into trouble?

I'm not sure the govt would want to get into that situation again.

Blup

 

[ellal]

Did this country let its banks go bust because the debts were mostly to foreign investors?

How did that work out for their financial services industry? Maybe proving blubs point?

Funnily enough this country paid back in full all it's foreign debts because it jailed several bankers and the threat of further incarceration time managed to force them to cough up where the 'hidden' funds were...

Do you still believe the myth that these foreign debts weren't fully reimbursed?

"HM Treasury has today (15 January 2016) confirmed that the government has received the final payment of £740 million from the Landsbanki estate in Iceland, which operated as Icesave in the UK. The government has now received £4.6 billion from the Landsbanki estate and litigation cases. Taxpayers paid £4.5 billion to UK depositors in Icesave, following the collapse of the Landsbanki estate at the height of the financial crisis in 2008"

"Today’s payment means that HM government has now fully exited from the Landsbanki estate, bringing to an end substantial negotiations between the UK and Iceland on recoveries from the estate. A line can now be drawn under this dispute"

Linky Linky

So how does that compare with the UK approach to it's own banks post 2008/2009?

Oh that's right, the UK government took over part ownership and then sold them back to the private sector at a massive loss to UK taxpayers...

Plus their financial services are in a much healthier position now than the UK ones are...

Btw, blub (like you it seems) don't really have a clue as to the facts as opposed to the RWM claims you appear to have swallowed without question!

 

[ellal]

Anyone on here got shares in European banks in their European investment portfolio?

Anyone on here stupid enough not to have a wide basket of investment options?

But then I guess old folks tend not to have the long term in mind