Italy Considers Tax Adjustments for the Defense Industry—Controversies Within the Government

Italy's Finance Minister Giancarlo Giorgetti recently suggested in a speech the possibility of a tax adjustment for the Italian defense industry. He emphasized that a comprehensive tax increase for various sectors, including arms manufacturers, could be considered to strengthen the state finances. Giorgetti stated, "There will be a general call for everyone to contribute, not just the banks.” His remark that those who produce weapons are doing particularly well amid the current global conflicts drew significant attention. When asked whether he was considering a tax increase in this area, Giorgetti replied unequivocally: "Obviously yes." This announcement occurred in the context of ongoing negotiations over the year-end budget plan, which is expected to demand further sacrifices from all citizens. His remarks immediately sparked reactions from government members on the right, who vehemently opposed new taxes. Deputy Finance Minister Federico Freni assured: "There is no planned tax increase. New taxes are not in this government's DNA." Foreign Minister Antonio Tajani also sought to clarify, stating that there had been misunderstandings regarding Giorgetti's statements: "As long as we are in government, there will be no new taxes for Italians." The share price of Leonardo, Italy's largest defense contractor, initially reacted negatively to Giorgetti's comments but stabilized over the course of the week. In recent years, the stock had significantly appreciated, thanks to a strong order backlog and increased defense spending as a result of the Ukraine war. In its latest half-year report, the company reported a record order backlog of 43 billion euros and a half-year profit of 555 million euros.