By Giuseppe Fonte and Alvise Armellini
ROME (Reuters) -The Italian government plans to collect more than 11 billion euros ($12.8 billion) from banks and insurance companies over 2026-2028 to help fund state finances, a draft budget sent to EU authorities for approval showed on Thursday.
The contribution will be on a permanent rather than one-off basis, and will amount to 0.19% of gross domestic product (GDP) in both 2026 and 2027 and to 0.1% in 2028, the document indicated.
No details were given about what form these measures would take.
The government is expected to unveil complete budget plans after a cabinet meeting currently scheduled for Friday.
However, a stalemate in talks with banks and insurance firms over their contribution to state coffers could force the postponement of the cabinet to early next week, sources familiar with the matter said.
Italy’s banking lobby ABI said earlier this week that lenders would agree to support the state through an extension of a measure imposed by the government last year entailing a multi-year freeze of tax credits, known as deferred tax assets (DTAs), that banks can tap to boost profits.
The DTA freeze provides short-term liquidity to the government by temporarily boosting tax revenues, something which is not in line with the permanent levy indicated by the draft budget.
INCOME TAX CUTS, DEFENCE SPENDING BOOST
Other funding measures include 8 billion euros of ministerial spending cuts over the three-year period.
The budget targets Italy’s deficit to fall to 2.8% of national output in 2026 from an estimated 3% this year.
Tax cuts and other expansionary measures over 2026-2028 will average around 18 billion euros per year, the Treasury said in the document.
The budget’s flagship measure is a reduction in the main income tax IRPEF at a cost of roughly 8.5 billion euros through 2028. The second of the three IRPEF tax brackets will be reduced to 33% from the current 35%.
It also freezes a three-month increase in the retirement age for those in physically strenuous professions.
The document said Italy would boost its defence spending by 0.5% of GDP through 2028, in line with commitments agreed with NATO and European partners.
($1 = 0.8587 euros)
(Editing by William Maclean)
