Budget Bill: Confindustria says 43 per cent of funding comes from businesses. Istat: savings of 8,000 euros with the flat tax

As regards Istat, its president, Francesco Maria Chelli, carried out a comprehensive review of the measures during the hearing. Here are some key points. With the extension of the flat-rate tax threshold for VAT-registered individuals from 85,000 to 100,000 euros, the 55,000 taxpayers who could qualify for the flat-rate scheme will enjoy tax savings of 8,000 euros compared with the standard scheme involving personal income tax (IRPEF) and additional charges. The change is expected to result in a reduction in tax revenue of approximately 400 million. Meanwhile, the increase – for 2027 only – in the second IRPEF tax band, with a rate of 33 per cent up to 55,000 euros, will affect around 3.7 million taxpayers and result in a reduction in tax revenue of just under 1.7 billion, with an average benefit of around 450 euros. The estimated fiscal drag for 2027 and 2028 is likely to stand at 5.4 and 3.5 billion respectively, whilst for 2026, assuming an inflation rate of 3.4 per cent, it reaches 6.5 billion. As for pensions, however, 3.5 million pensioners in 2027 will receive an average of 510 euros less gross.

Istat has emphasised that, when comparing the current system with the one proposed in the amendment, it is estimated that just over 3.5 million pensioners will be affected, who in 2027 will receive, on average, around 510 euros less in gross annual pension payments than they would have received had the tiered calculation system remained in place. ‘The amendment to the revaluation mechanism,’ noted Istat, ‘by reducing the amount of pensions, results in a lower taxable income and therefore a lower tax liability. This tax feedback effect amounts on average to a reduction of 220 euros in direct taxes, under the current IRPEF regime, resulting in an average loss of 290 euros. Taking into account both the IRPEF change provided for in Article 9 and the changes to the revaluation, for the group of pensioners affected by both measures, there would be a reduction in tax of approximately 360 euros per annum, a benefit that would reduce the average loss to 150 euros per annum.”

Istat estimates that the combination of IRPEF tax cuts, pension revaluations and maternity bonuses provided for in the budget will affect one in four households (6.5 million) and result in an average benefit of around 250 euros. The ‘peak’ is seen in the lowest-income quintile of households: more than three-quarters of the households affected fall within the top two-fifths of the income distribution, given that the IRPEF reform applies to taxable incomes above 50,000 euros and the change to pension revaluation affects relatively higher pensions.

In reality, the average figure is the result of two factors moving in opposite directions. For a group of almost 3 million households, the average loss is estimated at just over 200 euros; these are households with pensioners who do not benefit from the IRPEF reform. For the remaining 3.5 million households, the average benefit is 600 euros; in the lowest income quintiles, there is a significant impact from the €100 bonus for working mothers, whilst in the highest quintiles, the effect stems from the increase in the threshold for the second IRPEF tax bracket.

According to Istat, there are just under one million working mothers who will be entitled to an average of around 1,100 euros a year in 2027. There are 820,000 working women who have already received the €60-a-month benefit in 2026, and it is estimated that they will receive around €460 more per year in 2027. The remaining beneficiaries (160,000) will go from receiving a total exemption from social security contributions – which, net of tax, amounted to an average annual benefit of 1,500 euros – to receiving an average bonus of 1,100 euros, i.e. 400 euros less.

The funding for the budget – as reconstructed by Istat – derives for roughly half from the activation of the safeguard clauses (around 13 billion), more than a third from increased revenue (around 10 billion) and just under 3 billion from spending cuts, whilst further positive effects on the budget stem from the increased economic growth induced by the budget itself (1.3 billion net of higher interest expenditure). ‘The final impact of the budget on the general government budget in 2027 – as emphasised by President Chelli – entails a significant increase in final expenditure, amounting to just under 18 billion, and an increase in revenue of around 4 billion compared with the trend figures.’