By Silvia Marchetti
ROME (MaceNews) – Italy’s government will approve by end of this week the 2022 budget plan worth up to EUR 25 billion with tax cuts, pro-growth measures and a fix to the current pension system, according to sources.
“We’re holding a preliminary meeting today to define the general framework but we still need to hone the specific details and amount, and then forward the budget plan both to parliament and to the European Commission for approval,” said an official.
The budget document is likely to include some EUR 8 billion in tax cuts for firms and workers, and also a revision of the so-called ‘citizenship wage’ strongly supported by the 5 Stars Movement. The measure ensures a minimum wage to all jobless people as long as they have an Italian passport, and has been repeatedly criticized by other ruling parties.
The government could raise requirements for applicants and make it easier for poorer families to access the benefit.
“We must crack down on frauds and stop people from getting the citizenship wage when they already have an income for which they don’t pay taxes. We need to make sure that the jobless are actively seeking employment by boosting welfare support policies and the efficiency of employment centers in matching job demand and supply,” said a Democrat source.
A strategic document on how to improve the wage is under discussion by a government committee and should be presented to the cabinet by end of October. So far, there is just EUR 200 million earmarked in the budget plan next year to finance the 5 Stars’ citizenship income guarantee but the 5 Stars, now led by former premier Giuseppe Conte, is fighting to raise the amount.
Another thorny issue: fixes to the current pension system previously introduced by the League party in the former government co-led with the 5 Stars. The League is now battling against any potential pension overhaul.
Current pensions rules state that an employee can retire once the so-called ‘100 target’ requirement is reached, meaning the sum of retirement age and years of contribution must equal to 100 (ex: age 60, plus 40 years of contributions).
Government allies, including premier Mario Draghi, want to abolish this regime and extend the working life period but, according to sources, in order to keep the League on board, a compromise would need be found.
“We can’t just simply abolish it, also in consideration of those workers who are nearly reaching the target, so there might be a transitory period but truth is, ruling parties are still debating on how to adjust it,” said a Democrat official.
The budget plan is also expected to include an extension of the unemployment scheme to support laid-off workers in the post-COVID recovery, and additional resources for the health system and the vaccination campaign.
“There are enough resources to boost investments’ benefits for companies and to extend green investments’ tax breaks in upgrading buildings and houses,” said another official.
After a 9% contraction triggered by the pandemic, Italy’s economy is expected to grow by 6 percent this year, more than previous forecasts, while the deficit target was recently lowered to below 10 percent.
“This rosier outlook has cut debt costs. It provides for more pro-growth measures as most of the EUR20-25 billion for this year’s budget document will come from lower borrowing costs and EUR 4 billion raised from a crackdown on tax dodgers,” said the Democrat official.