Rome, 8 August 2023 (dpa/MIA) - In an effort to ease the impact of high inflation and interest rate hikes on citizens, Italy's government has introduced a 40% tax on banks designed to rein in excess profits.

Rome hopes to thereby raise "several billion" euros to help relieve the burden on the public, Italy's deputy prime minister and Lega leader Matteo Salvini said Monday night after a Cabinet meeting.

The measure is valid for this year only.

Italian banks are currently making big profits because of high interest rates on loans. Salvini said the new measure aims to help families and businesses that are struggling to keep up.

Revenues from the new tax are to be used to support people taking out mortgages, for example, and to reduce other levies.

The new tax is set to rake in a total of more than €2 billion ($2.2 billion) in revenue, media reports say.

"Let's just look at the banks' profits for the first half of 2023 to understand that we are not talking about a few million, but we can assume a few billion," Salvini said.

Prime Minister Giorgia Meloni's right-wing government approved a whole set of economic measures on Monday evening. The excess profits tax for banks came as a surprise to many observers, however, as it had not been on the Cabinet's agenda.

Photo: MIA archive