2027 Budget Bill: final negotiations on IRPEF cuts and other demands on the banks

In any case, the cut would be limited to 2027, pending a decision on how to make it permanent. This mechanism would not be new, as the same two-stage procedure was used at the start of the parliamentary term to introduce the three-rate personal income tax system. But this is precisely where the crucial difference lies compared with the current situation: because the task of making the new income tax structure permanent would fall to the next government.

This turning point marks the final stage of a manoeuvre which, on Tuesday 27 October, appears to have made significant progress in the discussions with the European Commission regarding the terms of application of the energy safeguard clause.

On this point, following days of numerous telephone calls and informal negotiations with Brussels, the Government is said to have drawn up a package that allocates to the deficit – by way of derogation from EU constraints – a not insignificant portion of ‘compatible’ expenditure that was already provided for in the public finance forecasts. This move would allow the government to replicate the manoeuvre already carried out last year – amounting to over 5 billion – through the extraordinary restructuring of the National Recovery and Resilience Plan (PNRR). In this case, the deficit allowed under the derogation would end up covering measures currently funded by the domestic budget, thereby freeing up scope for other measures.

Without altering the overall scope of the budget, and without the need for a second, acrobatic (and effectively impossible) deviation, the Budget Bill could thus bolster certain items on the agenda drawn up over recent weeks. First and foremost on the agenda are measures to support young people, starting with rent assistance to be combined with an extension of guarantees for first-time home buyers. In the same vein, there is a move to strengthen tax measures for small and medium-sized enterprises, and the tables could include a refinancing of the National Health Fund, which had been ruled out until Monday evening’s summit.

“As always, the aim is to balance the books, honour the commitments we have made, and continue to focus on the priorities we have set ourselves in recent years,” explained Prime Minister Meloni in her opening address at the Moneta Forum. “We have practically finalised the parameters of the safeguard clause, so we are satisfied,” said Economy Minister Giancarlo Giorgetti at the same event, confirming the introduction of tax relief for the under-30s. In short, by the evening of Tuesday 27 October, the picture was clear: with the not insignificant exception of personal income tax (IRPEF).