Italian minister proposes fresh taxes on arms makers’ windfall profits

ROME — Italian defense companies whose profits have soared thanks to armed conflicts around the world could face increased taxation, Italy’s finance minister has suggested in a speech which has been challenged by his allies.

Minister Giancarlo Giorgetti said the imposition of fresh taxes on Italian arms makers could be part of across-the-board revenue raising by the Italian government as it struggles to boost its finances.

“There will be a general call for everyone to contribute, not just banks,” he said on Thursday, adding, “One could say that with all these wars, those who produce arms are doing particularly well.”

Asked if he would consider upping taxation on the sector, he said, “Evidently yes.”

He added, “We will be approving a budget that will require sacrifices from everyone.”

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Shares in Italy’s largest defense firm, Leonardo, dropped after Giorgetti’s speech to 20.56 euros from 21.10 a day earlier before rising slightly to 20.87 euros on Friday.

The firm’s share price has risen dramatically in the last two years on the strength of new orders and the rise in defense spending fueled by the conflict in Ukraine.

From between six and seven euros a share just before the Russian invasion of Ukraine in February 2022, the price of Leonardo shares reached around 24 euros in June of this year.

Announcing its half year results in July, the firm said it had a record order backlog worth €43 billion, helping it make a half year profit of €555 million, up 168% on the previous year.

Giorgetti’s announcement, which came as the Italian government works on its year-end budget, prompted surprise from allies in Italy’s right wing government who oppose new taxes.

Federico Freni, a junior finance minister who answers to Giorgetti, said, “There is no tax raise for anyone being studied. New taxes are not part of the DNA of this government.”

On Friday, Italian foreign minister Antonio Tajani, said, “No new taxes, we are totally against imposing new taxes,” adding, “There have been some misinterpretations of some words said yesterday” by Minister Giorgetti.

He said, “as long as we are in government there will be no new taxes for Italians.”