Italian government approved outline budget including tax cuts to underpin ambitious reform agenda and boost growth after pandemic-induced crisis
Rome, (APP – UrduPoint / Pakistan Point News – October 20, 2021): The Italian government has approved a budget outline including tax cuts to underpin an ambitious reform agenda and boost growth after a crisis induced by a pandemic.
The plan, adopted by Prime Minister Mario Draghi’s office on Tuesday evening, has so far been poorly detailed, but officials say it contemplates a reduction in the tax burden, which media suggest is worth eight billion euros ($ 9.3 billion).
The eurozone’s third-largest economy is expected to grow 6% better than expected this year after a deep recession triggered by the coronavirus pandemic.
Last month, the government said it was aiming for a budget deficit of 5.6% of GDP next year, up from 9.4% this year.
He expects a public debt of 149.4% of GDP in 2022, against 153.5% in 2021.
The numbers are still well above what is allowed by the European Union‘s fiscal rules, but they were effectively suspended during the pandemic so that countries could emerge from the crisis.
Italy is the biggest beneficiary of the EU’s huge virus recovery fund, and is expected to receive some â¬ 191.5 billion in loans and grants over the period 2021-2026.
In return, Draghi agreed to a series of reforms to deal with long-standing structural problems weighing on growth, from justice to land registry.
A government statement indicates that the draft budget is intended to “support the economy in the exit phase of the pandemic and to strengthen the growth rate in the medium term”.
The measures agreed to include postponing plastic and sugar taxes to 2023 and a reduction in VAT on sanitary products, with money to help counter soaring energy bills.
Some pension reform is being considered but still seems to be the subject of an agreement, while stricter controls will be introduced on the “citizen’s income”, an anti-poverty benefit.
Both movements are politically sensitive involving, respectively, the signing policies of the far-right League party of Matteo Salvini and the once anti-establishment Five Star Movement (M5S).
The M5S and the League are both part of Draghi’s national unity government, in a somewhat delicate partnership with the center-left Democratic Party and other smaller entities.
Elsewhere in the budget, an additional two billion euros per year is allocated to health care until 2024, tax breaks for home renovations are mushrooming and more money will be spent on research.
The draft budget is sent to Brussels, where it must be approved before being adopted by the Italian parliament by the end of the year.