Italy is planning to implement a “solidarity” levy on the country’s banks to finance relief measures for families impacted by the cost-of-living crisis.

The levy on Italy’s banks is set to be part of a broad package of measures to be discussed by the cabinet on Monday, a source with knowledge of the matter told Reuters news agency.

On Thursday, economy minister Giancarlo Giorgetti said Italy’s government “cannot and will not ignore” the fact banks saw a rise in revenues over the past few months, as a result of higher interest rates set by the European Central Bank (ECB) to curtail inflation, yet have not adjusted rates on deposits in line with the increases.

Last month, the average interest rate on bank loans stood at 3.81%, the highest since June 2014, according to Italy’s banking association ABI last week. Whereas the rate on new loans to businesses averaged at 3.9%, the highest since January 2012, Reuters reports.

ABI went on to add that banks are starting to reward depositors more generously as long as they have a guaranteed duration.

Back in February, the average interest rate paid on term deposits in the country was 2.5%, compared to 0.57% in February last year.

Prime Minister Giorgia Meloni's administration is planning to approve €3.4 billion in tax cuts to bolster jobs and boost households' purchasing power.

The PM has requested a meeting with unions on 30th April to discuss the details of the package, according to a government statement.

As the country gradually ends the expansionary policy in place since 2020 to ease the impact of the pandemic, Italy is seeking measures to funds its relief packages. 

In addition, new EU rules also pile pressure on Italy to maintain a prudent stance in regard to state finances, the Reuters report adds.

Meloni has said over the last few months she was prepared to impose a separate levy on banks and payment companies on the net proceeds from electronic transactions of up to €30.