ROME, Nov 22 (Reuters) – Italy’s new right-wing government on Tuesday approved its first budget, a package of measures to cut sky-high energy bills and lower taxes from next year for workers and the self-employed .
Prime Minister Giorgia Meloni hopes the increased spending will speed up the recovery of the eurozone’s third-largest economy, which the Treasury forecasts will contract in the current quarter and the first quarter of next year.
The budget bill was approved around half past midnight (2330 GMT), Meloni’s office said, after a three-hour cabinet meeting. It now goes to parliament, which must pass it by the end of the year.
The measures total nearly 35 billion euros ($35.84 billion), with Rome planning to fund around 60% of the package by pushing next year’s budget deficit to 4.5% of gross domestic product (GDP). ) against 3.4% expected in September.
Other sources of funding include an increase in a windfall tax on energy companies that have benefited from soaring oil and gas prices, the Treasury said in a statement.
With the tax rate rising from 25% to 35% until July 2023 and calculated on profits instead of income, the new levy follows a framework proposed by the European Commission and replaces a regime which has drawn criticism and criticism. refusal to pay by many energy companies.
The budget toughens “citizen wage” conditions for the unemployed, which the right-wing coalition says discourages people from looking for work.
Next year, able-bodied people of working age will only be able to benefit from it for a maximum of eight months, before the complete abolition of citizens’ wages from January 1, 2024.
The budget allocates more than 21 billion euros next year to help businesses and households pay their electricity and gas bills.
To increase wage envelopes, it devotes some 4.2 billion euros to reducing the “tax wedge” – the difference between the salary an employer pays and what a worker brings home – for the benefit of workers at low income.
The package also introduces tax incentives aimed at encouraging the hiring on open-ended contracts of women under 36, fixed-term workers and people receiving a citizen’s salary.
SLOWDOWN ECONOMY
With biting inflation, Italy’s economy is expected to grow just 0.6% next year from 3.7% this year, according to the latest Treasury estimates, which are more optimistic than many independent forecasters. .
Implementing one of Meloni’s flagship tax proposals, the budget extends a flat tax rate of 15% for the self-employed to annual income of up to 85,000 euros, up from the current cap of 65,000 euros.
With a view to building a huge bridge linking Sicily to the Italian mainland, a long-running project of the Italian right, to oversee the project, the bill revives a dedicated state-backed company that had gone into liquidation.
One of the most controversial measures in the budget is an amnesty on back taxes of up to 1,000 euros dating from before 2016. Critics say such amnesties, which are not uncommon in Italy, encourage people not to pay their taxes.
The budget also conditionally lowers the retirement age next year, stipulating that Italians will be able to draw a pension from the age of 62 provided they have contributed at least 41 years.
Under a rule introduced this year by Meloni’s predecessor, Mario Draghi, people receive a state pension at age 64 provided they have worked for 38 years.
Taking into account the cost of living, the budget reduces VAT on sales of certain basic consumer products such as childcare products and feminine tampons from 5% to 10%.
($1 = 0.9766 euros)
Editing by Keith Weir
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