Italian financial maneuver under pressure: deficit, car tax and flat tax at the center of the debate

The risk of a maneuver without margins on the deficit, therefore with measures to be financed in full coverage: an uphill road now that the majority has invested political capital on Irpef, on aid for under 35s or commercial establishments, pensions. Measures that the DPFP makes appear in the balance. Not to mention the need to extend, or perhaps make 'structural', what is currently a suspension of stamp duty in 2027.

This is the situation in which the government finds itself, squeezed on the one hand by the pressure of the spread and the global energy shock which, even before the European constraints on the deficit, suggest prudence on public accounts with debt exceeding 138% of GDP. On the other hand, by the requests of the majority in view of the vote in 2027. The parties' menu for the budget law, under the heading 'costs', says that the abolition of the car tax, after the resources already allocated for 2027 (2.3 billion) which are based on the Pnrr, would require around 5 billion for a three-year stabilisation. Raising the income threshold for the Irpef rate to 60,000 euros from the current 50,000 to 33% is worth around 2.5 billion, a sum which according to the Pd economic manager Antonio Misiani "will cost what the fiscal drag will take away, or rather something less". The replication of the flat tax on contractual increases, holidays and productivity is worth 2.6 billion. The hypotheses of a 5% flat tax for newly hired under 35s are less demanding (we are talking about around 350 million).

Less realistic, however, in light of the DPFP, are the hypotheses of early retirement at 64 years (1.6 billion per year) and extension of the flat tax for VAT numbers to incomes up to 100,000 euros. Then there are the pension adjustments to inflation, and the alarm raised by the unions on the fiscal drain from inflation: they are estimated at between 3.4 and 8 billion which are added to the 30 billion - according to the CGIL - cost to workers between 2022 and 2025. "A profound social protest is growing because millions of Italians can no longer take it", thunders Angelo Bonelli, Avs MP and co-spokesperson for Green Europe. Maurizio Lupi of Noi Moderati speaks for the majority: "Resources must also focus on young people: we propose zero taxes for those under 30 and concrete help for those looking for a home, with a flat rate of 5% for long-term rentals".

But what 'cages' the maneuver are the numbers of the DPFP delivered to Parliament on Friday night, which give substance to the warning launched on Friday by the Minister of Economy Giancarlo Giorgetti regarding "greater attention". Interest spending next year will break 100 billion a year. The path of net spending, the key parameter of the new stability pact, does not allow margins for further deficit in 2027, instead leaving around 3.5 billion of room for maneuver in 2028 and 6.5 billion in 2029. Of course, there is the deviation that the government aims to obtain from the EU for energy and defense by activating the national safeguard clause: 14.4 billion in extra-deficit, between 2027 and 2028, for each of the two items. A stratagem for finding resources, entrusted to political negotiations with the EU, could be to find resources using the safeguard clause for already planned expenditure on defense or energy security. In the report to Parliament on the DPFP, on the energy 'NEC', interventions are identified on public transport for students, aid to businesses on renewables and decarbonisation, 'energy release'. There is talk of ecobonuses and charging stations but the requests are high: "helping families is necessary" but reducing bills for businesses "must be a priority" says the vice-president of Confindustria for Energy, Aurelio Regina.

The alternative to finding margins for maneuver would be remodulations of expenditure items, i.e. cuts. Or more revenue: from the taxation of 'extra profits' - a point of tension in the majority with the League pushing and Forza Italia holding back - to an always possible further increase, for example, in excise duties on tobacco. Measures that would come with the vote around the corner and a tax burden that would rise to 43% in 2026 according to the DPFP. A potential 'cul de sac' which explains much of the urgency with which Italy, not alone, is asking the EU for more "flexibility".