Italy must cut energy support measures adopt a prudent fiscal policy – maintaining net primary expenditure below 1.3% -, continue with the account recovery policy to adopt quickly the Pnrr and update it as soon as possible with the chapter RepowerMe also to reduce dependence on fossil fuels.
These are the recommendations of the European Commission to Italy in the context of the spring package of the European semester. Brussels, among other things, also invites Rome to further reduce taxes on work and return tax system more efficient and fair adopting the tax reform and aligning the cadastral values. In detail, the European executive invites Italy to “reduce the energy support measures in force by the end of 2023, using the related savings to reduce the public deficit”.
If the new increases in energy prices require support measures, it calls for “ensuring that they are aimed at protecting vulnerable, fiscally sustainable households and businesses and preserving incentives for energy savings”. Brussels asks to “ensure a prudent fiscal policy, in particular by limiting the nominal increase in nationally financed net primary expenditure in 2024 to no more than 1.3%”.
It’s still: “Preserve public investment financed at national level and ensure the effective absorption of Recovery grants and other EU funds, in particular to promote the green and digital transitions”. For the period after 2024, the EU asks to “continue to pursue a medium-term fiscal strategy of gradual and sustainable consolidation, combined with investment and reforms conducive to higher productivity and higher sustainable growth, to achieve a prudent medium-term fiscal position”.
“Reduce labor taxes again”
On the tax front, he invites “further reduce taxes on labour and make the tax system more efficient by adopting and duly implementing the enabling law on tax reform, preserving the progressivity of the tax system and improving its fairness, in particular by streamlining and reducing tax concessions, including VAT and subsidies harmful to the environment, and reducing the complexity of the tax code”. The invitation to “align the cadastral values with current market values” is reiterated.
In the context of Recovery, the EU calls for “ensuring effective governance and strengthening administrative capacity, in particular at the sub-national level, to allow continuous, rapid and constant implementation of the plan for recovery and resilience. Quickly complete the chapter RepowerEu in order to rapidly start the implementation. Proceed to the rapid implementation of the cohesion policy programmes, in close complementarity and synergy with the plan for recovery and resilience”.
In the green chapter, the European executive asks for “reduce dependence on fossil fuels. Streamline authorization procedures to accelerate the production of additional renewable energy and develop electricity interconnections to absorb it. Increase internal gas transportation capacity to diversify energy imports and strengthen supply security.
Increasing energy efficiency in the residential and business sectors, including through more targeted incentive schemes, targeting in particular the most vulnerable households and the worst performing buildings. Promote sustainable mobility, including by eliminating environmentally harmful subsidies and speeding up the installation of charging stations. Step up policy efforts aimed at providing and acquiring the necessary skills for the green transition”.