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Italy has doubled the flat tax on foreign income of new residents – a blow to wealthy expats seeking to flee the prospect of higher taxes elsewhere in Europe.

Prime Minister Giorgia Meloni’s cabinet on Wednesday approved an increase in the annual flat-rate tax on foreign income for new tax residents in Italy to 200,000 euros.

The current €100,000 tax incentive, while popular among wealthy individuals, is controversial among Italians, especially in the economic capital of Milan, where the recent influx of super-rich people is blamed for a sharp rise in property prices and other living costs.

The government hopes that this move will also help raise tax revenues and bridge the gaping budget deficit, allaying concerns in Brussels about Italy’s public finances.

The decision comes at a time when Rome is struggling to tackle its budget deficit, which reached 7.4 percent of gross domestic product last year, well above the three percent of GDP target for EU member states.

The EU forecasts that Italy’s budget deficit will reach 4.4 percent of GDP in 2024, still well above the target. In July, this prompted Brussels to initiate excessive procedures requiring Rome to present a medium-term budget adjustment plan by the end of September.

Finance Minister Giancarlo Giorgetti, who on Wednesday described the levy as a “so-called flat tax for billionaires,” initially did not comment on how much additional revenue is expected from the new tax rate.

However, Giorgetti said the increased levy was still at a level that would be “interesting” for wealthy individuals. He later clarified to the Financial Times that the higher levy would only apply to people who take up tax residence in Italy from now on, and not to those who have already moved there.

Rome also wanted to avoid a race to the bottom with other countries that are trying to attract individuals and companies through tax breaks. “When this competition starts, countries like Italy – which has very limited fiscal space – are inevitably doomed to lose,” the finance minister said on Wednesday.

Italy – normally considered a high-tax country – has become a popular new home for the world’s nimble super-rich in recent years, thanks to generous tax breaks introduced in 2016 to counter the long-term brain drain.

The scheme was introduced after many Europeans living in the UK returned home following the Brexit vote. It allowed new tax residents in Italy, or Italians who had lived abroad for at least nine years, to pay a flat tax of just €100,000 on all foreign income and assets for 15 years.

So far, the program, known locally as the “Footballer’s Program,” has persuaded at least 2,730 multimillionaires, including private equity managers, oligarchs and entrepreneurs, to move their residence to Italy, mostly to Milan.

The tax breaks have been met with opposition from many Italians, particularly in Milan, where the influx of wealthy people is blamed for a 43 percent rise in property prices over the past five years and a nearly 20 percent rise in rents in the two years to March.

Nevertheless, many investors had expected a further influx of large investors as the new British Labour government prepares to abolish the controversial “non-dom” regime, which had allowed wealthy foreigners to avoid paying taxes on income earned abroad.

Three Hills Capital Partners, a London-based private equity firm, said last month that it was preparing to open a private members’ club in Milan in the fall, the latest in a series of upscale venues to open in the city in recent years.

Dismayed foreigners warned that the sudden change in the flat tax and the resulting lack of long-term fiscal stability were a bad omen for people considering moving there.

A French investor who is currently moving from London to Milan to benefit from the program said he is not currently reconsidering his plans, but “it makes it more expensive” and the direction of development is worrying.

He added: “It sends a signal that this is not a stable regime and I find that terrible.” Referring to the rising flat tax rate, he said: “You have to ask yourself: 100,000 euros, then 200,000 euros, then 400,000 euros?”