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Italy Revives Bank Windfall Tax Debate As Cyprus Considers New Levy

Italy has revived debate over taxing banks’ rising profits after Deputy Prime Minister Matteo Salvini proposed an annual levy of about 5% for three years on the profits of the country’s 10 largest banks.

Salvini cited first-half results from Intesa Sanpaolo and UniCredit, which reported combined profits of nearly €12 billion. The proposed levy would apply to major banking groups and exclude smaller local banks as Italy discusses its 2027 budget.

Cyprus Faces Renewed Pressure On Bank Tax

The proposal comes as Cyprus continues to debate whether banks should face an additional charge on higher profits. Several EU countries, including Spain and Hungary, have already introduced extraordinary taxes or levies on the banking sector, while Cyprus has not adopted a comparable measure.

AKEL has proposed a new solidarity levy on credit institutions, but the bill remains pending before Parliament. The renewed debate in other European countries could put additional attention on the issue in Cyprus.

Europe Has Tested Several Bank Levy Models

EU countries have used different approaches to taxing or charging banks. Lithuania introduced a temporary levy on higher net interest income, Latvia imposed a fee on performing home loans, and Estonia reached an agreement with banks on extraordinary distributions.

The European Commission has examined these measures and found concerns around fairness and market distortion, but no evidence that they caused systemic financial instability in the countries where they were introduced.

Banks across the EU also contribute to deposit guarantee schemes through mandatory payments. Those contributions are separate from taxes but represent an additional financial burden for the sector.

Cyprus Has Proposed Several Measures

AKEL proposed a 5% extraordinary levy on banks’ excess profits for 2024 and 2025 in 2024. The measure was expected to raise about €50 million annually for borrower support and housing programs, but Parliament rejected it on Dec. 12, 2024, in a vote of 25 in favour, 25 against and four abstentions.

In November 2025, AKEL introduced a revised bill covering the 2025 and 2026 tax years. The proposal would impose a 20% charge on increases in net interest income above 40% of the 2022 level.

AKEL argues that higher interest rates have increased borrowing costs for households and small businesses while widening the gap between lending and deposit rates.

ELAM has separately proposed increasing the special tax on banks based on total deposits from 0.0375% to 0.07%. The additional revenue would be directed toward state housing programs.

Banks Warn Of Higher Costs For Customers

The Cyprus Banks Association has argued that additional charges could ultimately affect customers through higher lending rates or lower deposit returns. Local banks already pay corporate tax, a special credit institution tax and contributions based on deposits, as well as payments to the Deposit Guarantee Fund.

Banks also face capital and supervisory requirements that affect their balance sheets and lending capacity, although these obligations are not taxes.

The European Central Bank has said eurozone banks currently have strong profitability, capital and liquidity positions. Average return on equity stood at about 9.8% in the second quarter of 2025.

ECB Warns Against Weakening Bank Capital

The ECB has also warned that windfall taxes need to be designed carefully. If additional charges significantly reduce the profits banks retain as capital, they could weaken financial resilience, limit lending capacity and affect competition.

Italy’s proposal has therefore renewed a broader European debate that is also relevant to Cyprus. Policymakers must weigh additional public revenue against the potential effects on bank capital, lending conditions and financial stability.

NERDs Replace FIRE As Young Workers Lose Confidence In Retirement

The FIRE movement promised younger workers a path to financial independence and early retirement. Now, a different group is emerging in the UK: NERDs, or the “Never Ever Retiring Demographic.”

Growing pessimism among Gen Z and millennials is driving the shift, with many questioning whether retirement will ever be financially achievable. Some are responding by reducing or abandoning pension contributions altogether.

Young Workers Are Losing Confidence In Retirement

Research from People’s Pension, a major UK workplace pension provider, found that 47% of Gen Z respondents aged 18 to 27 do not engage with their pension. Another 12%, equivalent to about 2.2 million young people, have stopped saving for retirement because they expect to work indefinitely.

Wider financial pressures are contributing to that outlook. High living costs have pushed milestones such as homeownership, marriage, having children and retirement further away for many younger workers, while inflation, layoffs and stagnant wages have added to uncertainty.

Pension Providers Face A Communication Gap

Financial pressure is only part of the problem. Young workers also say pension providers are failing to explain long-term saving in ways that feel relevant to them.

About 36% of respondents said providers do not explain retirement saving effectively. Among them, 27% said companies appear more focused on selling products than educating customers, while 16% cited complicated language and jargon.

A clear generational difference emerges in the responses. Some 29% of Gen Z respondents said providers fail to explain why pension saving matters, compared with 13% of Gen Xers and Baby Boomers. Similarly, 17% of Gen Z said providers do not use channels they engage with, versus 4% among older generations.

Clearer information could influence behavior. About 70% of Gen Z respondents said they would have started saving earlier if they had known that beginning in their 20s could potentially double their retirement pot compared with starting in their 30s. Another 63% said learning about tax relief and employer contributions motivated them to save.

“In a world where financial doom dominates pension conversations, young savers are tuning out,” said Kirsty Ross, proposition director at People’s Pension. “Our research shows they are not disengaged because they don’t care, they are disengaged because the messages aren’t working.”

Young Savers Want Simpler Tools

Progress bars and goal trackers were among the most popular tools respondents said could make pensions more relevant, cited by 31%. Another 26% wanted reassurance that they could start with small amounts, while 23% wanted examples of what people their age are doing.

Clear, bite-sized steps were cited by 22%, while 19% said light-hearted and relatable stories could make pensions more accessible.

People’s Pension has responded with Pension Drop, a campaign using social media influencers, live events and lifestyle personalities to encourage conversations about retirement saving.

“Looking back, I really wish I’d started earlier,” said Iain Stirling, comedian, TV presenter and Pension Drop ambassador. He said contributions made in someone’s 20s or 30s can make a significant difference later, while employer contributions and tax relief can increase the value of smaller payments.

Small Changes Can Improve Long-Term Saving

Stirling urged younger workers to check their pension provider, establish whether they have multiple pension pots and make sure they are contributing enough to receive the full employer match.

He also recommended increasing contributions after a pay rise or bonus, allowing workers to raise long-term savings without making a large immediate change to their spending.

For younger workers facing high living costs and uncertain career prospects, pension saving remains a difficult sell. Clearer information about employer contributions, tax relief and the long-term effect of starting early could help make retirement planning more tangible.

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