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Thursday, December 7, 2023

Maneuver, tax wedge reduction and Irpef but few resources

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Confirming the reduction in premium payments remains the government’s priority. Working employees who earn less would therefore continue to benefit from slightly higher wages, but many billions are needed and money is scarce. It will be necessary to better understand the financial framework for another proposal: that of reducing taxes for people with middle incomes

Most of the next budget will be used to keep fourteen million workers on slightly higher salaries for a few months. By confirming the reduction in the so-called tax wedge, the government aims to ensure that employees pay fewer premiums in practice.

Two-thirds of the money for the maneuver must be found

An increased relaxation in May (the Draghi government had implemented the first cuts) that Giorgia Meloni wants for the whole of 2024. It would cost about ten billion, i.e. about a third of the total value assumed so far for the budget law: in practice all the resources currently available.

The tax authorities eat some of the extra money from your paycheck

In this way, Italians with a medium-low income (the threshold is 35 thousand euros gross per year) would continue to receive a higher salary, on average around 100 euros. But there is an already known problem associated with this relief: the increase resulting from the wedge reduction ultimately leads to an increase in taxes for the same workers who benefit from it, so – as the Deputy Minister of Economy Maurizio Leo said – some of the extra money ends up being eaten by the tax authorities.

Lower income tax for middle-low incomes

The same government representative proposes, as envisaged in the tax reform, to remodulate the levels of income tax (Irpef), merging the first two steps, so that those with an income of up to 28,000 euros per year pay 23 percent (as is currently the case is). done by people with an income up to 15 thousand). In practice, the number of people paying less to the Treasury would increase.

Less taxes, less income

However, the state would collect less money not only from the workers facilitated by the wedge reduction, but also from all other taxpayers. A problem to be solved, Leo said, when the framework within which the maneuver should be designed is clearer.

Source: TG 24 Sky

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