The Bank of Italy has expressed doubts about this measure. The new course of the Via Nazionale was inaugurated by the new Governor Fabio Panetta, former Director General of the Bank of Italy and member of the ECB’s Executive Committee, who takes over from Ignazio Visco, who has reached the end of his second term. Seems pretty obvious already.
Bank of Italy: “Negative impact for the entire Italian economy”
“The decision to implement an expansionary maneuver associated with the privatization plan implies that the ratio between public debt and GDP will fall only marginally over the next three years,” it warned. Deputy Head of the Department of Economics and Statistics of the Bank of Italy Andrea Brandolini, in hearings before the Joint Budget Committees of the House and Senate. And then: “LThe high level of relationship is an element of insecurity For the country. This reduces the cushion to absorb any adverse shock and also increases the cost of credit for private borrowers Negative impact on the competitiveness of the entire Italian economy,
This is an alarm bell that cannot be ignored by the Maloney government. “In addition to the budget bill, the interventions contained in the advance decree and the two draft legislative decrees implementing the tax reform delegation, initially approved by the Council of Ministers on 16 October, also contribute to the definition of the overall maneuver” explained Brandolini, who was influential. Displays a range of data. “In our assessment, the budget’s expansionary measures will amount to Rs 7 billion in 2023, Rs 34.7 in 2024, Rs 20.9 in 2025 and Rs 17.8 in 2026; The coverage will amount to 3.9 billion in the current year, 19.0 in 2024, 16.3 in 2025 and 21.6 billion in 2026.
+600 euros more per family? yes but…
Brandolini said yes that the changes in contribution rates and IRP would result in a An average increase of 1.5% in household income in 2024 compared to current legislation, equivalent to approximately 600 euros per year, “About 3 out of 4 households will benefit, while other households will not face a significant change in income”. But it is not enough.
Two-thirds of the increase is due to exemption from contributions, with the remainder due to changes in IRPEF. Households – he explained – between the second and sixth tenths of the distribution of equivalent disposable income would benefit from the most significant income growth, up to 2.3%. Growth in the top tenth of distributed income will be less. “Interventions would lead to a small reduction in equivalent disposable income inequality: the Gini index would fall by 0.3 percentage points”. Good, but not enough.
The measures under discussion – the Bank of Italy continues in its reasoning – will be reflected in the monetary incentives of individuals and may change the behavior of some. For all taxpayers with income from work, Effective marginal tax rates will be reduced by an average of about 3 percentage points, At the same time, Irregularities in their performance will increase closer to the two income limits,
“As a result of the decontribution – he explained -, the profile of the new effective marginal rates will show a first peak for employees with an annual income of about 25 thousand euros and a second, more marked peak, of about 35 thousand euros: in the latter situation, many taxpayers will be less than 100. will be subject to marginal tax rates exceeding .%.”
Joke of the limit of 35 thousand euros
According to estimates developed by Lilia Cavallari, President of the Parliamentary Budget Office, heard by the Joint Commissions of the House and the Senate in connection with the budget legislation, the reduction in the tax wedge envisaged by the 2024 budget ensures “significant support for the lower and middle classes”. income, especially that of workers”. But The deduction has been abolished for income over 35 thousand euros, This is for those whose income is just over 1 euro compared to 35 thousand euros Lost profits of approximately 1,100 euros per year,
“In the event of an extension of the measure”, which is currently only scheduled for 2024, “there will be stronger disincentives to work and reaching contractual renewal agreements will be more complicated”, he explained. In short, a joke.
Contribution relief is the item that absorbs the most resources in the general framework of budget law. It is temporary in nature, like the last two years, with its impact Brandolini defining as “limited to the next year”. “To avoid a sudden increase in contribution rates or resorting to new budget deviations in a year’s time, it seems appropriate to define an orientation for the medium term in the coming months,” he warned.
Privatization? hard to do
On privatization, the Bank of Italy’s position is clear: “It is a difficult goal to achieve” And, furthermore, “It is not specified in the maneuvers or even in NADAF. In general, we have done fewer privatizations than we intended to do in Italy. So it is ambitious and we will see how they can be achieved and which assets will be subject to privatization” Brandolini commented again, addressing Economy Minister Giancarlo Giorgetti and his team.
Bankitalia also confirmed this during the hearing in Parliament. The phase of weakness of the Italian economy for which it has forecast GDP growth of +0.7% this year, According to Bankitalia, the “high uncertainty” caused by the conflict in the Middle East could jeopardize the achievement of Nadef’s objectives by tightening the framework and financing conditions.
“Our forecast for growth is slightly lower than those given by the government: 0.7% for 2023 and 0.8% for 2024. These are what we did in October and despite the latest information, we still do not rule it out. Our multipliers are consistent with this estimate given the maneuverability expansion associated with the possibility of spending a portion of middle-low and even middle income. So how much impact can it have?” he replied again.
Confindustria: “Lack of development strategy”
A rejection also comes from Confindustria Meloni to the government. In the hearing, President Carlo Bonomi speaks of “the absence of a development strategy”., even though he defines the budget introduced by the Maloney government as “reasonable to the extent that it concentrates the few resources available on a reduction in contributions for 2024.” But it is somewhat “incomplete”, given the “absence of adequate support for private investment and a strategy aimed at growth and competitiveness”.
Considering budget law and fiscal delegation together, “we are on a very rare occasion – highlighting the bonomi – where a Extensive maneuvering takes resources away from the production system Because it takes away the ace”, 4.6 billion, and “We’re negative 1 billion”. Of the budget’s $30 billion comprehensive measures, about 55% are dedicated to workers and only 9.4% to businesses.,
“I don’t care about lower IRES if I get hired, because We have no problems at this time of occupation“, or rather “We lack profiles, 800 thousand profiles are missing“, Bonomi then said. As for the hiring incentive, “I believe that as an entrepreneur it is not right to use public resources, because it is my job to create jobs and recruit. “I don’t like taking public money to do my work.” For Bonomi “opening the door to development can no longer be postponed”.
Giorgetti defends the maneuver
Minister Giorgetti Meanwhile, of course, he continues to defend his actions. talk again “Drastic” maneuver to cut expenses, but widening resources for middle-low income workers: 2/3 of the measures are dedicated to employees with incomes up to 50 thousand euros, he reiterated. There are also additional benefits up to 2 thousand euros, but even here this is not enough.
“The budget bill I have presented focuses available resources on clear and well-defined objectives, to provide some response to the needs of the most vulnerable individuals in a context that is still fragile. At the same time – the Minister underlined – it introduces interventions aimed at promoting the overall sustainability of public finances in the medium-long term, which is a fundamental element to promote the growing and sustainable development of our economy.
The most important area of maneuver intervention is represented by support for families, “to compensate as far as possible – Giorgetti said – the loss of purchasing power they have suffered so far. The result should be that a Support for consumption, employment and GDP growth,
Furthermore, he explains, “Additional people have been introduced Birth rate measures always act as levers of decontribution For women workers.” This is another part of the “patient and responsible” work, Giorgetti said, “that we are doing to implement the programmatic interventions planned for this legislature gradually and consistent with the spaces available. Are.”