Italy Meloni avoids clash with Brussels with prudent budgets scaled

Italy: Meloni avoids clash with Brussels with prudent budgets | Economy

The electoral noise decreases as winter approaches and the budget law approaches, the best moment to gauge the real intentions of the government of the far-right Giorgia Meloni. On Tuesday morning, after a Council of Ministers that lasted well into the early hours of the morning, Italy’s prime minister appeared before the media to explain the design of public accounts, the only political statement that can be accurately measured. Unsurprisingly, there is no fanfare, no challenge to the European Union, and few promises kept (at least from its coalition partners). There is no margin for errors, they believe in the government. Not for experiments. “These are responsible and prudent accounts,” said Economy Minister Giancarlo Giorgetti in his presentation. The main movement will consist of beginning to dismantle the Citizen Income, the subsidy that the 5-Star Movement (M5S) implemented during its time in government and that the Meloni executive will definitively liquidate in 2024.

Meloni, aware that his electorate could expect a greater break, tried to distance himself from the previous government and assured that the budget law is courageous and “political.” He outlined a series of measures that seek to promote birth rates by lowering VAT on baby products and increasing the amount and duration of maternity leave. He spoke of a tax truce —a euphemism for forgiveness— for debts of up to 1,000 euros contracted up to 2015. He also spoke of a slight reduction in the tax burden. But beyond this type of initiative, the budgets represent a continuation of the line maintained by the Mario Draghi government with an increase in spending of 35,000 million euros that will mainly (21,000 million) be destined to help families and companies before the rise in the price of energy.

The Meloni executive, made up of the League, Forza Italia and the Italian Brothers, has come up against a complicated reality and little room to develop their project and lower taxes, as promised. One of Meloni’s main battlehorses during the campaign was the abolition of the Citizen’s Income, the measure that allowed individuals and families in poverty to receive a subsidy indefinitely while they could not find work. It is received by 2.5 million Italians and costs about 8,000 million euros. But there were thousands of scams and a heated debate about its convenience. “It is the end of the Citizen Income for those who can work,” Meloni announced at the beginning of her press conference.

The leader of the Brothers of Italy proclaimed during the campaign that it was an incentive not to work and that they would eliminate her as soon as she entered the Chigi Palace. Yesterday, her government lowered her intentions and extended her life for at least one more year. But she will be more restrictive. The possibility of receiving it will last only eight months and will be lost when the first job offer that arrives is rejected. The idea is that within a year only people who have no real possibility of working can benefit from it. That is to say, it will be abolished as it is conceived. The leader of the M5S, Giuseppe Conte, has already announced protest mobilizations, something the government feared. But resources were needed for some of the tax proposals and pension increases that wanted to be carried out.

One of the great electoral flags in fiscal matters of the League and Forza Italia in the campaign was to implement a flat rate of personal income tax of around 15%. An unusual tax occurrence that no developed country has and that has been reduced to an extension of something that already existed. The Italian self-employed who earn up to 65,000 euros paid up to now 15% personal income tax, but with the new budgets the range of possible beneficiaries reaches up to 85,000 euros in income. In addition, the tax wedge for workers with incomes of up to 20,000 euros will be reduced by 3%.

Meloni’s problem in closing these budgets was a coalition partner and Vice President of the Government, Matteo Salvini. The League leader had made unrealizable promises during the campaign. In addition, his electoral weakness forces him to exaggerate his and carry out some internal opposition to recover some ground. But Meloni was very clever and appointed the deputy secretary of the League and Salvini’s right-hand man, Giancarlo Giorgetti, as economy minister. So that any hint of protest and opposition was deactivated, as has been seen now. “We are very satisfied with the budgets. There are all the requests of the League ”, declared Salvini.

The reality is somewhat different. The reform of the pension law, for example, is not the one that the League had implemented during the time that it governed with the 5 Star Movement. The so-called Quota 100 becomes quota 102. That is, a computation of 41 years of contribution will be established to stop working at age 62. Something that would affect only about 50,000 people. In addition, the rise in minimum pensions will not reach the 1,000 euros that Silvio Berlusconi had promised during the campaign.

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