2027 Budget Bill: final negotiations on IRPEF cuts and other demands on the banks
Cabinet meeting at 3 pm. A tax rebate of up to 54–55,000 euros is being pushed through, whilst there is a tug-of-war over funding. The energy clause paves the way for other measures
At 3 pm today, Wednesday 28 October, the Council of Ministers is expected to approve the Budget Bill. But as of yesterday evening, the web of cross-negotiations between ministries and majority leaders was still in turmoil. On the issue that now looks set to be the budget’s inevitable flagship measure, whether or not it makes it into the final text: the IRPEF tax cut for the middle class.
Support for the middle class
The extension of the second tax bracket had been dropped from the list of measures ten days ago. But not from the ambitions of a section of the ruling coalition, starting with Forza Italia. It was the meetings on Tuesday 27 October, including a further lunch meeting between Prime Minister Giorgia Meloni and her deputies Antonio Tajani and Matteo Salvini, that brought tax relief for the middle class back into the spotlight, albeit in a scaled-back form that would extend the 33 per cent tax bracket up to 54–55 thousand euros, and only for one year, pending better times.
However, even this first step requires funding. A study points towards a course of action deemed more or less unavoidable by the Ministry of the Economy: namely, a further increase in the bill to be presented to banks and insurance companies.
Put like that, the decision is politically sensitive. And the burden would fall entirely on the shoulders of Forza Italia leader Tajani. In recent weeks, the Forza Italia leader had championed a two-pronged demand: not to put too much pressure on the financial sector regarding the new ‘contribution’ being sought, whilst not giving up the tax relief for the middle class. However, according to the scenarios drawn up in the Ministry of the Economy right up until late on the evening of 27 October, the two options are mutually exclusive: a scenario that would therefore involve financing the extension of the second IRPEF tax bracket alongside a tightening of fiscal measures for credit institutions.
The banking issue
The lever would be a further increase in the IRES surcharge, which stood at 2.5 percentage points until the afternoon of Tuesday 27 October. The rate is now reported to stand at 3 per cent. This would provide the approximately 1.3 billion needed to take this step and cut the second tax rate by ten points for around 600,000 taxpayers declaring up to 54–55,000 euros. Unless, that is, another source of revenue can be found capable of closing the gap without further inflaming the political tensions between the Government and the banking sector.
