While waiting for the medium-term budget structural plan to be presented to the Council of Ministers, presumably next week, the political forces that make up the majority continue to advance their priorities in view of the drafting of the next budget, including taxes, pensions and welfare. The opposition hypothesizes that we are moving towards a text made up of cuts to social spending and they ask for interventions in favor of the health sector. The maneuver, a document that is said to be slightly more than 25 billion euros, should include the confirmation of the cut in the tax and social security wedge for incomes up to 35 thousand euros to combat inflation. Among the hypotheses under study there would also be that of trying to extend it to incomes up to 50-60 thousand euros. But resources are limited. And we must deal with the excessive deficit recovery plan for which the EU has opened an infringement procedure.
Prime Minister Giorgia Meloni, in her report to the FdI executive, reiterates that “it will be a budget law inspired, like the previous ones, by seriousness and responsibility“. The prime minister emphasizes: “We will move, as we have already done, along two fundamental lines, enough with the waste and with the follies inherited from left-wing governments and which have devastated public finances such as the Superbonus”. All available resources, according to Meloni, must be “concentrated on supporting companies that hire and create jobs and to strengthen the purchasing power of families, with particular attention to those with children”. The Minister of Economy Giancarlo Giorgetti, after the League summit in Montecitorio, clarifies that the structural plan will be “presented by mid-month in the Council of Ministers and then in Parliament” and that pensions “like all other expenditure items, will be addressed in the maneuver. They will also be discussed in the structural plan”. The head of the Ministry of Economy and Finance jokes: “I read a lot of strange, imaginary things, that I don’t even know about. First of all we need to have the picture, when we have it we will be able to define the interventions. In the summer there is the transfer market, when it ends then reality arrives, the matches. The same thing happens with the budget law: during the summer everyone writes things like the transfer market, then there comes a time when the things that need to be done are done.” The League would ask for an extension of the flat tax perimeter and not to extend the exit windows on pensions. Forza Italia, through the group leader in the Chamber Paolo Barelli, recalls that “the available sums must be allocated to cutting the tax wedge, to measures for growth and support for work. For minimum pensions, the revaluation already done in 2023 must also be carried out in 2024”.
In the structural plan, the government aims to define the trajectory for net spending, consistent with the new Stability Pact and the time horizon established by the EU for the recovery from the excessive deficit to be achieved through a recovery plan that has a duration of 4 years, extendable up to 7 years. It is estimated that Italy can proceed with cuts equal to approximately 0.5%-0.6% of annual GDP to recover from the infringement procedure. The text will also contain an indication of the deficit for the indicated programming time horizon. In the summer, the Parliamentary Budget Office estimated that just to confirm the interventions financed last year in the budget, approximately 18 billion are needed, of which just under 11 for the cut in the wedge. For other interventions, therefore, the room for maneuver appears limited. Help could come from the increased tax revenues recorded in the period January-June 2024, the latest bulletin from the Ministry of Economy and Finance certifies an increase of 10.1 billion compared to the same period of the previous year (+4.1%).
The update on tax revenues is expected on Wednesday. Then there is the hypothesis of a cut in tax expenditure, a set of hundreds of exemptions, deductions, tax credits, reduced rates. In 2016, a study on behalf of the Senate recorded over 600 different measures, with a financial impact of almost 80 billion euros – but complete information was not available on 67% of tax expenditures. Other resources could come from the effects of the revision of the two-year preventive agreement. Even if the previous one in 2003 – even in a different context – did not have the hoped success, collecting just 57 million euros compared to the estimated 3.5 billion. The opposition foresees cuts. “It is not a ‘market budget’ that has started at all, but unfortunately a ‘market cut’. In fact, everyone realizes that for the next maneuver, at most, they can bet on which sector will be cut the most between pensions, healthcare, investments, because it is clear that everything will be cut”, comments Elisa Pirro, M5S group leader in the Senate Budget Commission.