Italy government

Factbox-Italian government approves 2023 budget, key points

© Reuters. FILE PHOTO: Italy’s Prime Minister Giorgia Meloni speaks during a news conference to present his government’s first budget in Rome, Italy November 22, 2022. REUTERS/Remo Casilli

ROME (Reuters) – Italy’s new right-wing government approved its first budget in the early hours of Tuesday, a package focused on cutting sky-high energy bills and cutting taxes from next year for workers and the independents. Here are some of the key points of the package, which is now going to parliament where it must be approved by the end of the year. PUBLIC FINANCES Next year’s budget deficit is expected to fall to 4.5% of gross domestic product from 5.6% this year. The package is still expansionary because under an unchanged policy scenario, the deficit ratio was heading towards 3.4%. This is primarily due to strong incomes fueled by inflation, which is driving up sales taxes and excise duties related to soaring energy prices. Public debt is expected to decline slightly to 144.6% of GDP from 145.7% this year. ECONOMIC BOOST The budget contains nearly 35 billion euros ($35.95 billion) in spending increases or tax cuts. Some 60% will be financed by increased borrowing. The rest will come from targeted tax increases and spending cuts. BREAKING TAX AND CRYPTOCURRENCIES The increase in a fallout tax on energy companies who have benefited from soaring oil and gas prices is expected to bring in some 2.5 billion euros. The tax rate increases from 25% to 35% from January to July 2023 and, unlike today, will apply to profits instead of income. The budget will also tax capital gains on cryptocurrencies, but details are not yet available. AID FOR THE ENERGY CRISIS More than €21 billion to help businesses and households pay their electricity and gas bills, mainly through subsidies for energy-intensive businesses and low-income families. TAX CUTS FOR EMPLOYEES About €4.2bn is being spent on reducing the ‘tax wedge’ – the difference between what an employer pays and what a worker takes home – to benefit workers low income. The tax rate for productivity bonuses up to 3,000 euros is reduced from 10% to 5%. Implementation of tax incentives to promote hiring on permanent contracts of women under 36, fixed-term contracts and people benefiting from the “citizen’s salary” unemployment benefit. TAX CUT ON SELF-EMPLOYED EMPLOYEES For the self-employed, the budget raises the ceiling for annual income taxed at the single rate by 15% to 85,000 euros against 65,000 euros. The same rate of 15% is applied to any increase in income compared to the previous three years, with a ceiling of 40,000 euros. POVERTY REDUCTION SCHEME “SALAIRE DES CITIZENS” Next year, able-bodied people of working age will only be able to benefit from the allowance for a maximum of eight months, before the complete abolition of the scheme from 1 January 2024. PENSIONS Next year Italians will be able to receive a pension from the age of 62 provided they have contributed at least 41 years. This compares to the current rule, put in place only this year by the previous government, allowing people to retire at 64 provided they have worked for 38 years. The budget also extends until 2023, with adjustments, an early retirement scheme for women. Beneficiaries will be able to receive a pension at age 58 if they have at least two children, at age 59 with only one child and at age 60 otherwise.
The budget reduces VAT on sales of certain basic consumer products such as childcare products and feminine tampons from 10% to 5%. ($1 = 0.9736 euros)