At the antipodes of electoral speeches, the new head of the far-right Italian government Giorgia Meloni is preparing to complete a draft budget for 2023 which is in line with the policy advocated by her illustrious predecessor Mario Draghi.
Giorgia Meloni would like to avoid at all costs the misadventure of the last populist government formed in 2018 by the 5 Star Movement and the League (far right), engaged in a battle with Brussels on the deficits before reversing in the face of the outcry on the markets.
“Italy will respect the” European rules, she promised during her general policy speech at the end of October. While she had a lot to do to curb her allies, the League and Forza Italia who are pushing for spending, her first budget should go to the Council of Ministers on Monday evening.
The budget will devote 21 billion euros to measures to support households and businesses in the face of soaring energy prices, out of a total of around 32 billion euros, which leaves very little room to finance gifts electoral.
“So far, the government has shown pragmatism and realism” and recognizes that its electoral promises cannot be achieved all at once, but “will be spread over the period of the mandate” of five years, notes Lorenzo Codogno , ex-chief economist of the Italian Treasury.
Mario Draghi’s remedies
“With the global economy slowing and interest rates rising, they are forced to remain cautious,” he told AFP. “The Minister of Economy Giancarlo Giorgetti belongs to the moderate wing of the League, he will mainly apply the remedies of Mario Draghi”.
Mr. Giorgetti, former Minister of Economic Development under Mr. Draghi, intends to implement the electoral measures in homeopathic doses, even if it means offending the leader of his party, Matteo Salvini.
“It is a prudent and responsible budget, in continuity with the Draghi government, apart from a few symbolic measures which have little impact on the accounts but are addressed to the electorate”, comments for AFP Giuliano Noci, professor of strategy at the Polytechnic school of Milan.
Flagship measure of the coalition, the extension of a flat tax of 15% for auto-entrepreneurs with annual incomes of 100,000 euros instead of 65,000 currently, should thus stop at 85,000 euros initially.
While Ms. Meloni has pledged to “reduce the tax burden on businesses and households”, the rebate could be limited to 2% for salaries up to 35,000 euros per year, as under Mario Draghi, and increase to 3 % for income below some 20,000 euros.
Among the electoral promises are also tax amnesties to encourage taxpayers to regularize their situation in exchange for a discount on the money owed.
Also on the program, the raising of the ceiling for cash payments which should increase to 5,000 euros, against 2,000 euros today.
“It’s a first class trip for fraudsters and corrupt people who walk around with bribes in cash,” protested Giuseppe Conte, leader of the 5 Star Movement.
– Pension puzzles –
Another controversial measure, likely to displease in Brussels, is the advancement of the retirement age, which should be established at 62 years old on the condition of having contributed for 41 years.
Without this transitional measure, the retirement age would increase from 64 to 67 in 2023, as provided for by a reform dating from 2011.
“Lowering the retirement age is not very appropriate, because Italy has a lot of old people and few young people working,” Mr. Noci warned.
To finance these measures, the Meloni government intends to cut the citizenship income, aid to the poorest received by 2.5 million beneficiaries, to ultimately exclude those deemed able to work.
Another source of financing, the taxation of the “surplus profits” of the energy giants introduced in March by the Draghi government could increase from 25% to 33% and be based on profits and no longer on turnover.
Italy: Populist Giorgia Meloni converts to budgetary orthodoxy