Cut the top tax wedge, ‘starting in May’
“We are working on it being valid from May. So it will probably arrive by the end of the month (April, Mr. Dr)”. According to Federico Freni, Undersecretary of the Ministry of Economy, who interviewed him Radio 24The ordinance on the tax wedge should take effect as early as next week. Thus taking advantage of about 3.4 billion euros that the government has managed to collect in the folds of public accounts and which, as announced in Def, will be directed to the new intervention on the tax wedge in favor of workers with average incomes – low, public and private, for the period from May to December 2023.
Cut the tax wedge by up to 4%
And the Minister of Labor, Marina Elvira Calderoni, had announced, in recent days, another percentage point reduction in social security contributions paid by employees, which – according to her hopes – should rise to 4%, while the commitment to the term, the minister confirmed, remains 5 points. total. “We will film most of this intervention – Calderon explained during an event organized by Fondipresa – again to support families and income from work”. Even the Deputy Minister of the Economy, Maurizio Leo, explained to Corriere how the intervention would be carried out: “The reduction of the tax wedge will double from May”.
salary increase (small)
The announcement included in the definition of the new tax cut will mean that the employee payroll will change again. There will be new (small) increases and a rolling reduction in the tax burden. But how much? Meloni’s government inherited from Draghi a peg cut of 2%, for incomes between €25,000 and €35,000, and 3% for those under €25,000. Now, if it were increased by one percentage point (4% up to €25,000 and 3% up to €35,000), we would get a further improvement, albeit a modest one. Those with an income of €20,000 will see new savings of around €11 per month, while the increase in payroll will be around €14 for those with an income of €25,000. The extra 15 euros in the €30,000 income stipends is exceeded by a few cents, which rises to nearly €16 and a half for those earning €35,000 a year.
Where does the treasure come from?
Calling it a “treasure” would be an exaggeration, because the €3.4 billion raised by the government to finance the new cut in the tax wedge is a paltry sum for a massive intervention. After all, that’s what we’ve been able to find from the difference between the trend/GDP deficit (Italy’s debt level, in 2023, currently at 4.35% of GDP) and the programmatic target (the deficit target that the government wants to achieve and which has been maintained in Def at 4.5%, same as in the previous Nadef). Thanks to this delta, the government asked Parliament for permission to use the treasury. Therefore, these three billion times what was approved by the budget law.
Unions are not satisfied. Confindustria: “It’s not enough”
However, the economic and financial document approved by Meloni’s government in recent days was rejected by the unions and did not satisfy even the hearts of businessmen and industrialists. In fact, everyone is calling for reforms to go ahead, to put Pnrr on the ground and not to overlook the lack of tax reform. And to top it all off, Confindustria warned, during hearings of the House and Senate budget committees: 3 billion to cut the tax wedge is still too little. For CGIL, Def is “not suited to confronting the stage we’re in” suggesting “very modest growth trajectories”. There is a lack of answers about wages, extra resources for investments, and the real fight against extra earnings. Uil’s ruling is also stern, defining it as a “missed opportunity”, denouncing a major step back towards austerity. Even the leader of Via Lucolo – who was waiting to see the text – was not satisfied: “There are no answers we were waiting for,” said Pierpaolo Bombardieri, of the CNT council in Ail Abruzzo. CISL is at a loss, wondering how the upward economic growth projections contained in the document can be realized. “It is not how the contribution reduction will be covered, how the financing for the renewal of contracts will be secured that will be needed over the 8 billion specified by the government and the relevant decree-law envisaged on pensions but it is not known how much the resources amount to,” he said, with the risk of slipping reform. Fornero’s law forward. Also for Ugl, even if Def took a cautious line “he probably could have gone a bit further”, considering the indicators are “pointing towards improvement”.
Confindustria: “Cutting is not enough”
For industrialists, confirmation of deficit targets set in November is a good thing in fact, “the fiscal balance is crucial to avoiding further increases in interest rates on public debt and in those charged to businesses and households,” he notes. Confindustria, which for 2023, expects a “slowdown in Italian GDP”, weighed down by the ECB’s monetary policy and slowdown in consumption and business investment, but above all construction in the face of interventions on bonuses. But a warning also comes from viale dell’Astronomia: the cut in the wedge envisioned by Def is “small” and must be combined with other resources to be recovered through a “careful spending review”.
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