The economic maneuver enters the decisive phase, this month of September will close with the approval of the Def. From now until the end of the year, the Government will have to transform the discussions and announcements into financed measures, dealing with a public debt close to 139% of GDP and with an interest cost that the Minister of Economy Giancarlo Giorgetti has defined as growing “at an alarming rate”. The first step will be to establish how much space really exists in the public accounts, i.e. how much economic availability there is to implement the Budget; the second decides which interventions can be included in the 2027 budget law. In the background there is also the approaching political elections, which makes this maneuver particularly delicate for the majority.
The issues on the table of the 2027 budget
Abolition of car tax
A first measure has already been approved but it is expected to be made structural, i.e. also valid for the next few years with economic coverage. This is the abolished car tax for motorcycles and cars up to 80 kW, limited to one insured vehicle for each citizen. The indicated audience is approximately 14.5 million vehicles, with a cost of more than 2 billion euros. However, coverage remains to be defined, including compensation for lower revenues for the Regions. For coverage, the electoral law is awaited; if they are not found, the abolition is valid only for 2027.
Cuts in Irpef and employment taxes
On the fiscal front, a new reduction in personal income tax for the middle class is being discussed. One of the hypotheses envisages extending the second bracket with a rate of 33% up to 60 thousand euros, compared to the current 35%, producing a maximum saving estimated at around one thousand euros per year.
The proposals also include the extension of the 5% preferential taxation on increases resulting from contract renewals and the expansion of the flat tax for VAT numbers.
Pensions and increase in retirement age
On the social security front, the main issue is the one-month increase in pension requirements expected from 2027 due to the adjustment to life expectancy. To neutralize it, approximately 1.1 billion euros would be needed. The majority also evaluates a new increase in minimum pensions, but the measure will have to find additional coverage: the necessary resources are not included in the estimated cost of blocking the increase in the retirement age.
Healthcare, families and work
On the healthcare chapter, the maneuver will have to establish how many additional resources to allocate to the National Health Fund and how to use them, in particular for staff and the reduction of waiting lists. For families, confirmation of the bonus for working mothers is being evaluated, while at work the extension of the 5% preferential tax rate on increases resulting from contract renewals and new incentives for the hiring of young people and women are being studied. The tax relief on thirteenth wages and further concessions on productivity bonuses also remain among the hypotheses.
Home bonus expiring
Without an intervention in the budget, in 2027 the deduction for work carried out on the main residence would drop from 50% to 36%. For other properties the rate should go from 36% to 30%.
The majority will then have to decide whether to extend the more favorable percentages or let the already planned reduction come into force.
The contribution requested from the banks
The real game will be that of coverage. The League proposes a contribution of 5% on bank profits, which could generate between 2 and 3 billion euros. Forza Italia prefers to avoid a new tax and resort to tax advances.
Energy companies could also be involved in the discussion, especially to finance interventions against high bills. The Government’s definitive position will emerge only with the overall quantification of the maneuver.
The dates of the maneuver until approval
Updated data from Istat and Eurostat on public accounts will arrive on 22 September. A possible improvement in the deficit could allow Italy to exit the European excessive deficit procedure sooner, but it would not automatically translate into resources to spend.
Between the end of September and the beginning of October the Council of Ministers will have to approve the public finance planning document, with the new estimates of GDP, deficit and debt and an indication of the space available for manoeuvre.
By 15 October, Italy will have to send the budget plan to Brussels. At this stage the political lines must already be accompanied by a quantification of income and expenditure.
The budget bill must be presented to Parliament by October 20th. The examination will then begin in the Chamber chosen for the first reading, with hearings, amendments and negotiations between the Government and parliamentary groups.
Between November and December the discussion on the changes will focus. The text will then pass to the other branch of Parliament, which will have much shorter deadlines and could limit itself to ratifying the agreement reached in the first Chamber.
The final deadline is December 31st. By that date the Budget law must be definitively approved and promulgated, avoiding the use of a provisional exercise. It is precisely in the last weeks of the year that the parties’ wish list will have to become a maneuver with real cover.
