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The legge di bilancio, the Italian budget for 2023, was presented on November 22. “A courageous budget consistent with the commitments made to Italians,” was how PM Giorgia Meloni defined it at a press conference at Palazzo Chigi. This budget is strongly marked by a clear political vision, and, in barely a month since the government took office, has also laid the foundations for the proper functioning of the legislature.
The Premier also added that the measures adopted overnight by the Council of Ministers form part of a global strategic commitment undertaken. “It is a courageous move, because it bets on the future,” Meloni announced, thus clarifying that even the policies to support companies and families have a scope that is not limited to cushioning only the difficulties of the present but aims at investing in tomorrow.
The text will be debated by the commissions this week and after being reformed, it must reach the Chamber of Deputies before December 20, with a vote of confidence or without further interventions to allow a quick passage in the Senate and its approval by the end of December.
The budget law increases current expenditure by 35 billion euros and has two main priorities: growth, which involves ensuring the productive fabric, rewarding those who produce the most; and social justice, with attention to families, to those with the lowest incomes, and to the most fragile categories. The head of government emphasized that she was happy with the work done and the approach to the family budget, “when one takes care of one’s budget and resources are lacking, one should not worry about consent, but about what is fair to make the family grow in the best way, for that, decisions are made and responsibilities are assumed”, she added.
Delving into the merits of the steps taken, the Prime Minister explained that most of the resources – 21 billion – were channeled into reducing the impact of the energy crisis, in order to “secure the productive fabric and families.” In this context, the Government has confirmed and increased tax credits for companies, from 40% to 45% for energy-intensive companies and from 30% to 35% for non-energy-intensive companies.
For families, it has increased the amount benefited depending on the family income, raising the threshold from 12,000 to 15,000 euros per year. This is a special measure for the most vulnerable families, amounting to some 9 billion. With regard to windfall profits by companies due to price increases, the rate has been raised from 25% to 35% to recover 2.5 billion euros. In addition, the 5% VAT on gas has been extended until March.
Focusing on production, the policy line seeks to encourage and reward work in line with the commitments made during the election campaign. There are 3 fixed taxes in the budget:
- The first one on incremental income: 15% on the highest profit obtained with a maximum limit of 40 thousand euros. A measure aimed at the middle class, not as a favor to the rich, but to recognize values and sacrifices, according to the words of the premier.
- The second is for the self-employed, with the 15% threshold raised to 85 thousand euros.
- The third is for employees, who will be able to enjoy a 5% tax on productivity bonuses of up to 3,000 euros. “This measure is in addition to the extension of the marginal benefits already approved,” added the Roman leader.
On the other hand, the government has devoted the most resources to the employment sector: the largest allocation, after energy, is to reduce the tax wedge. It is 4.5 billion euros destined to confirm the 2% cut for incomes up to 35 thousand euros and to add an extra 1% for those up to 20 thousand, which will therefore be able to count on an overall 3%. The benefits of the measure will be entirely on the side of the workers and confirm the government’s attention to those with lower incomes.
Then there is the first application of the program that Meloni summarized in the election campaign with the slogan “the more you hire, the less you pay,” since no social contributions will be paid by those who hire women, young people up to 36 years of age or recipients of the reddito di cittadinanza, a basic income for the unemployed that varies according to the composition of the family unit. This will only apply to new contracts, because the measure is intended to create more jobs or greater stability, even with the transformation of fixed-term contracts into open-ended contracts.
In addition, work bonuses of up to 10 thousand euros have been introduced in agriculture, the tourism sector and domestic workers. In turn, the tax on plastic and sugar has been postponed.
A “tax truce” is also envisaged for citizens and companies that have been affected by economic problems in recent years, mainly due to the consequences of the closure of activities due to the pandemic and the high cost of energy – let us remember that Italy had one of the worst business shutdowns in all of Europe. Individual debt issued up to 2015 will be cancelled, with an amount of less than one thousand euros. They will be able to pay in installments the 2022 taxes without additional penalties and interest for those who have not paid them due to the Covid emergency, rising costs of services and economic difficulties.
As for what the new government calls unfair competition, it has launched a provision against companies that “open and close”, i.e. those companies that open, contribute nothing to the State, disappear and then start again, “we believe that entrepreneurs and traders must be defended from unfair competition and illegal practices” stressed the Prime Minister.
But, above all, the measures in which the government’s political imprint clearly emerges are those related to families, pensions and basic income. The family package is a real package, which in turn lays the foundations for a legislative program. “1.5 billion euros were earmarked for families and the birth rate, a commitment that I don’t think is unprecedented in recent governments,” the head of government assured.
The package includes increases in the single allowance (50% more for the whole first year of the child’s life; 50% more for three years for large families with 3 or more children) and the stabilization of the increase for disabled children, something that was transitory and not structural, “we believe that it is a fundamental condition that disabled children have more than others”, he stated.
Among the family-friendly policies are, on the one hand, all early childhood products and sanitary napkins will have a VAT rate of 5%, and on the other hand, the subsidy for the first home for young couples is confirmed, among which the State coverage reaches up to 80% of the mortgages.
However, the government has decided not to approve the reduction to zero VAT on bread and milk explaining that the measure would also rub off on those who do not need it because it is not possible to distinguish between incomes. Therefore, they will select certain foods and products by decree using these 500 million euros to lower the price of these goods for the deprived through the network of Municipalities and also involving producers and distributors.
Regarding pensions, the APE sociale is extended, i.e., the early retirement that would correspond to 67 years of age by law, with corrections to make it more balanced and interventions in the scale of pensions that will allow people to retire between 62 and 41 years of contributions. And by a principle of equity -according to the Government- the minimum pensions will be revalorized by 120%, those up to 2,000 euros by 100%, and thus escalate to pensions equal to or higher than 10 times the minimum whose indexation will stop at 35%.
“This is a political choice for which we take responsibility,” said Giorgia Meloni as she recalled her historic battle over the need for rebalancing mechanisms with respect to privileged pensions.
Finally, the issue of basic income. The leader of Fratelli d’Italia explained that more time was needed for comprehensive reform, but that in the meantime those who cannot work – disabled, elderly, families without an income with dependent minors, pregnant women – will continue to be protected, while the basic income will be abolished at the end of 2023 for those who cannot work, and cannot be received for more than 8 months, in addition to expiring at the first refusal to work and the obligation to be present on the national territory.
“We gave ourselves a transitional period to support employment and encourage employers to hire people who are currently on basic income,” he said.
To conclude the press conference, Meloni sentenced that those who imagined the state as a tool to keep people from 18 to 60 years old taking care of them forever, are wrong, “the state helps people to be able to find a job and to improve the conditions of these people,” she concluded, reiterating that “we intend to come back to this issue in general.”
While left-wing governments seek to obtain eternal captive votes through basic income or public jobs, right-wing governments, such as Fratelli d’Italia, focus on creating private employment and opportunities. They do not seek to have slaves dependent on the state, they intend that their citizens achieve goals of greatness through merit, rewarding those who can produce more wealth. There are two clear and completely antagonistic political models: it is our responsibility to decide which future we want for our nations.
Candela Sol Silva is Fratelli d’Italia’s press officer in Argentina.
Candela Sol Silva es columnista y es la jefa de prensa de Fratelli d'Italia en Argentina // Candela Sol Silva is a columnist and is the press officer for Fratelli d'Italia in Argentina