Italy: Parliament has finally approved the 2023 state budget

The Italian Senate on Thursday finally approved (107 votes in favor, 69 against) the 2023 state budget, the first of the far-right coalition government under Prime Minister Giorgia Meloni, which broadly embraces the philosophy of her predecessor, the former President of the European Central Bank, Mario Draghi, envisaging in particular measures to mitigate the consequences of soaring energy prices and high inflation.

There was no doubt that the text – approved last Friday by the Italian Parliament (221-152) – would pass, as the government linked it to a vote of confidence. Unlike the House, the Senate could only vote on the budget as a whole, while there was practically no debate on the substance of the measures it contains.

“Mission accomplished,” Finance Minister Giancarlo Giorgetti said after the vote, stressing that the law had won the confidence of markets, European institutions and ultimately the Italian parliament.

Markets were steady yesterday after the budget was approved. The yield on Italian ten-year government bonds fell around 4.5%, while an index of the so-called blue chips of the Italian stock market closed with a rise of 1.2%.

The European Commission approved in mid-December the outline of the new government’s draft budget in Rome, although it called some of the measures it envisages incompatible with earlier recommendations it had made in Italy.

The text contains provisions to support businesses and households to cope with the high cost of energy, in particular tax breaks and subsidies, totaling €21 billion. It forecasts an increase in the deficit to 4.5% of GDP, up from the 3.4% it was talking about in September.

One of its provisions criticized by opposition parties was the abolition of the welfare measure Reddito di Cittadinanza (“citizens’ income”).

The opposition accused the government of leaving little time to study the draft budget, which the coalition rejected, arguing that with elections held in September it was a given that the timetable for approving the bill would shrink. The text was presented in November.

Among other things, it lowers the minimum retirement age to 62 — the pensionable years must be 41 —, gives tax incentives for employment with open-ended contracts, gives tax amnesties and cancellations or reductions of fines for overdue certified debts to the public.

Employees will benefit from a 2% reduction in payroll tax for incomes up to 35,000 euros a year, as under the Draghi government, and by 3% for incomes below 25,000 euros, while the minimum pension will increase to 600 euros for beneficiaries over 75 years of age.

Mrs. Meloni’s government included in the text an increase in the ceiling for cash payments from 2,000 to 5,000 euros, although the Commission had opposed this provision, considering that it increases the scope for tax evasion.

RES-EMP

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