ROME, Oct 20 (NNN-AGENCIES) – Prime Minister, Mario Draghi’s cabinet, yesterday passed a draft budget for 2022, worth some 23 billion euros (26.7 billion U.S. dollars), which would deliver expansionary measures, including a sharp cut in income taxes.
The draft indicates the main policy framework the government intends to follow for next year, including the targeted budget balance and the projections for expenditure and revenue.
The budget aims at boosting Italy’s growth to 4.7 percent next year, according to the forecast provided by the Economy and Finance Ministry, in late Sept.
Overall, the government set aside some eight billion euros to implement the tax cut. The measure would be mainly devoted to decreasing the tax wedge, namely the difference between the total labour costs borne by an employer and the net take home pay of a single average worker.
Despite having partially reduced it recently, Italy still showed the fifth highest tax wedge – amounting to 46 percent of total labour costs – among the 37 countries belonging to the Organisation for Economic Cooperation and Development (OECD) in 2020.
The cabinet approved a cut from 22 percent to 10 percent of the so-called tampon tax, meaning the value-added tax, charged on feminine hygiene products, such as tampons.
The draft budget also included stimulus measures to help the euro-zone’s third largest economy keep recovering from the impact of the COVID-19 pandemic.
In this perspective, key provisions included a renewal of supportive measures in place, such as, a guarantee fund for small- and medium-sized firms, incentives to improve energy efficiency in buildings, which benefits the construction sector, and resources for the internationalisation of Italian enterprises.
The draft budget also set aside a yet unspecified amount to mitigate the forecast increase in electricity and gas bills for households.
Other resources were allocated for welfare spending, such as expanding the social benefit net to types of workers who are currently neglected, and improving nursery school services.
A compulsory paternity leave of 10 working days – a measure firstly introduced in the country last year – was also confirmed.
The cabinet discussed – but did not agree yet on it – a change in the pension mechanism known as “Quota 100,” which currently allows some working categories to avoid the ordinary regime, and retire once they have reached 62 years of age.
In the final statement, the cabinet just specified the draft budget will include “actions in the pension field … to ensure a gradual and balanced transition to the ordinary regime.”
If all cabinet parties will find a deal in the next few days, this scheme would reportedly be modified by pushing the threshold to 102 in 2022, and to 104 in 2023, thus slightly delaying the retirement age for these groups and reducing the financial burden for the Italian state.
Among other measures approved in the draft, two billion euros annually in the period 2022-2024, were allocated to the national health system, to improve access to treatments and prevention services and to finance innovative vaccines and anti-COVID drugs.
Finally, new taxes the cabinet was planning to introduce on sugar drinks and plastics will be delayed from 2022 to 2023.
Draghi’s cabinet is expected to submit its draft budget to the European Union (EU) Commission for review. Once evaluated – and eventually amended, according to the European Commission’s opinion – the draft will have to be approved by the Italian parliament by the end of the year.– NNN-AGENCIES
