In a cost of living crisis and amid high interest rates, the concept of a windfall tax on banks’ profits is currying favour with governments. Italy’s administration is the latest to consider such a proposal, after it suggested a one-off levy on banks’ net interest income. It then quickly backtracked on the levy’s scope after the share prices of Italian banks plummeted. The proposal will now make its way through parliament for ratification.
But should we now expect to see windfall taxes become a part of the playbook for governments looking to appease voters as the cost of living crisis continues to bite? And are such taxes justifiable in the wider economic context?
