Rome: Italy’s Parliament has approved the 2025 budget, aiming to both appease European Union (EU) demands to lower the eurozone nation’s deficit and honour Prime Minister Giorgia Meloni’s pledge to cut taxes.
Announced last Saturday, over half of the package, worth some €30bil or about US$31bil, is devoted to cuts to tax and social security contributions for low and middle-income earners.
Rome is having to perform a fine fiscal balancing act, after Brussels took Italy to task earlier this year over its debt worth nearly €3 trillion, the second-highest as a proportion of gross domestic product (GDP) in the EU.
Meloni’s hard-right coalition has committed to reducing the public deficit to 3.3% of GDP in 2025, down from an expected 3.8% this year.
But the budget comes amid slowing growth, with the ISTAT national statistics office estimating GDP this year to increase just 0.5% – half what it forecast in June.
The measures approved include making permanent a merging of the lower two income tax brackets, so people earning €28,000 a year can pay 23% instead of 25%.
And the budget expands the number of people eligible for a reduction of social or tax charges.
Meloni’s far-right Brothers of Italy party is also trying to boost Italy’s flagging birth rate, and the budget allocates a €1,000 bonus per newborn for families earning up to €40,000 a year.
Environmental associations have complained there is little for tackling man-made climate change, though Rome is scrapping a bonus for gas-fired boilers, under pressure from Brussels.
Instead, buyers of energy-efficient household appliances will be eligible for a bonus of up to €100 – rising to €200 for households earning under €25,000.
Companies that boost hiring and reinvest part of their profits will be able to benefit from a reduction in the corporate tax rate, which drops from 24% to 20%. — AFP
