Def, the document to the Chambers. Tax credit measures to keep the deficit at bay. Priority to confirm the wedge cut
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In the Def without money that the Council of Ministers approved on Tuesday, there are the government’s intentions in view of the autumn budget but no certainties yet. As explained by Minister Giorgetti following the government meeting, in the document sent to the Chambers there is an estimate of the so-called “unchanged policies for the next three years, within which priority will be given to the refinancing of the cut in the tax wedge on labour” .
The problem is that the worsening of the debt/GDP trajectory (in absolute value, the debt will exceed 3 trillion in 2025 can be seen in the tables) and the expected evolution of the deficit – also taking into account that a European procedure will arrive on this point – do not allow the stock market strings to be opened. And, as explained by Republic, confirming the various measures introduced in an experimental form in 2024 (starting with Irpef remodulation and decontribution) costs at least 20 billion. “Immediately, the Government intends to continue adopting measures aimed at intervening on the deficit profile, further improving it also through a review of the rules on tax credits in order to bring it back below 3 percent of GDP by 2026, as envisaged in the Nadef”, we read in the Def. The tightening of the Superbonus, therefore, may not be the final act. “Such actions will be aimed at improving not only the accrual balances, but also the cash balances, thus lowering the profile of the debt/GDP ratio already in the short term”, continues the text.
Giorgetti has repeated several times that – given the new European rules on public budgets arriving – the new deadline to close the programmatic framework is September 20, even if the Treasury aims to arrive early. By then the new guidelines of each country will have been discussed with Europe, as part of the new Stability Pact. In that context, the government aims to “agree with the European Commission on the extension of the public finance adjustment to seven years” to put the debt on a reduction path. And the future medium-term budget structural plan to be submitted to the EU “can only start from the results already achieved with the Pnrr” by consolidating investments and reforms on the ecological and digital transition and responding “to the investment needs of defense and the essential objectives of improving social equity and demographic recovery of the country”, writes Giorgetti again in the introduction to the Def. We therefore return to the issue of looking with a benevolent eye at some voices of expenditure in the overall judgment of Brussels.
The Document contains some scenarios on public finances. Among others, it explains what would happen to growth if the BTP rate rose by 100 points: half a percentage point of growth would be lost between 2025 and 2027. The impact would stop at -0.1% on GDP 2024, would rise to -0.4% on 2025 and -0.5% on 2026 and 2027. In the public finance trends it is then written that “the tax pressure it will reduce in 2024 to 42.1% (from 42.5% in 2023, ed) to rise to 42.4% in 2025 and settle at a slightly lower level in the final two years of the forecast period”. And again, the health spending expected for 2024 is equal to 138,776 million, with a growth rate of 5.8 percent compared to the previous year.
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