–Flat tax for VAT-holders raised to EUR 85,000 income
–Measures to cushion impact of energy costs are the biggest share of spending
–‘Citizenship wage’ for jobless slashed; retirement age cut
By Silvia Marchetti
ROME (MaceNews) – Italy’s government budget plan for 2023 is set to total EUR 35 billion, including pro-growth measures and subsidies to offset rising energy costs, which will be largely funded through greater deficit spending throughout the year, with more resources likely needed in the second quarter, according to ruling coalition sources.
The newly-elected rightist government is honing the technical details of next year’s budget document, which will then be forwarded to parliament for approval by year-end and to the European Commission for the final approval.
Sources noted how available resources are less due to lower growth expectations, which means the government will request yet another increase in deficit spending set to further raise public debt, forecasted at nearly 160 percent of GDP in 2023, up from 155 percent in 2022.
“The total amount of the budget plan will be around EUR 35 billion, of which EUR 21 billion to be raised through more deficit spending to be approved by parliament, and which will entirely go into additional measures to support low-income families and ailing firms from soaring energy bills,” said an official.
However, sources warned that these EUR 21 billion might not be enough to offset soaring energy bills for the entire year and could suffice just for three to four months, which would push the government to earmark additional resources later, possibly through more deficit spending decrees.
“Much will depend on what the geopolitical and international scenarios will be, if and when the war in Ukraine will come to an end, and what repercussions there will be in the long run on energy prices and general inflation. That is something nobody can really predict,” said the official.
The remaining EUR14 billion of the budget is expected to be raised through a cut in public expenditures and a repatriation of foreign-based Italian capital. A part of this amount will be “useful financial help deriving from savings and budget cuts made by the previous government of Mario Draghi,” added the official.
Another source said time was of the essence in pushing the budget plan through parliament before Christmas, with only a few working weeks left before the holiday closure.
A League official hailed the budget for raising the so-called flat tax at 20 percent on yearly incomes to up to EUR85,000 from EUR.65,000 for all professionals and VAT holders.
Another key measure is reduction of the controversial citizenship wage for the unemployed, introduced in 2019 by the former government led by the 5 Stars Movement and deemed by the new cabinet as squandering public money (over EUR30 billion spent in four years).
The monthly wage cheque would be cut to roughly EUR 500 from EUR 700 and to only eight instead of 12 months, while only the jobless actively seeking for a job are entitled to it.
“There will be a transition period, we’re now trimming it down, but our goal is to scrap it altogether next year and introduce some other sort of safety net for the unemployed, provided they are not lazing around but actually looking for work. We will be closely monitoring the applications to avoid further frauds, and if one applicant turns down a first job proposal, that person will no longer be entitled to the benefit,” said a source.
Premier Giorgia Meloni is also focusing on pension reform aimed at scrapping tough retirement rules introduced back in 2011 by the technocrat government led by Mario Monti. According to government plans, workers are now entitled to retire when they will be 62 of age with at least 40 years of contribution, down from 66/67 at present.
Other minor budget measures include labor costs cuts for firms, reduced VAT on a few daily goods for families and tax incentives for new hirings. Ruling parties will now define the exact amounts to earmark for each budget measures by end of this week.