2027 Budget, Bank of Italy: ‘Unexpected taxes increase uncertainty’. UPB: ‘IRPEF cut for 89 per cent of managers, 1 per cent of workers’
According to Palazzo Kock, frequent – albeit legitimate – changes to pensions undermine confidence; increasing the deficit is costly, whilst boosting GDP is not. The superbonus scheme has a significant impact on banks. UPB: a net financial benefit of 23.5 billion is estimated for households over the three-year period, of which 4.7 billion will go to employees.
Key points
- Increase in household disposable income
- Superbonus scheme has a significant impact on banks
- Frequent changes to the pension system are undermining confidence
- A rising deficit is costly; boosting GDP
- UPB confirms measures will require 16 billion in new funding
- Income tax relief for 89 per cent of managers and 1 per cent of manual workers
‘The higher levy’ provided for in the Budget measures affecting banks and insurance companies ‘affects sectors with sound profitability and capital positions. However, this does not diminish the importance of a stable and predictable regulatory framework: frequent or unexpected changes to taxation increase uncertainty and influence operators’ investment decisions.” This was stated by Andrea Brandolini, head of the Economics and Statistics Department at the Bank of Italia, during a parliamentary hearing on the Budget Law. Overall, the measures affecting banks and insurance companies contained in the Budget Law “place an additional burden on credit intermediaries and insurance companies, following the measures that affected them last year”.
Superbonus scheme has a significant impact on banks
The provision in the Budget Law that spreads the 2023 Superbonus credits over ten annual instalments “helps to contain the growth of public debt in 2027” and “could have a significant impact on the income statement” of banks in the 2026 financial statements. “The possible effects on resale agreements entered into by certain intermediaries to dispose of credits purchased in excess of offsettable tax liabilities must be assessed,” he noted. “For non-financial firms, which are also subject to the provision, the instalment scheme could affect liquidity.”
Increase in real household disposable income
Brandolini added: ‘Overall, we estimate that the Budget Bill will increase households’ disposable income, albeit modestly, and to a slightly greater extent for households with low to medium incomes. At the same time, it increases the complexity of the personal income tax system: it reduces the IRPEF tax base and increases the number of tax rates.”
Frequent changes to the pension system are undermining confidence
Furthermore, according to the Bank of Italy, ‘whilst legitimate, frequent and unannounced interventions in the equalisation mechanisms reduce the predictability of pension benefits and undermine confidence in the pension system. Looking ahead, this confidence is also significant in terms of incentives for labour supply’.
A rising deficit is costly; boosting GDP
‘Prudence in the management of public finances and the commitment to complying with the new European regulatory framework have been welcomed both by investors, as evidenced by a narrowing of the yield spread between Italian and German 10-year government bonds, and by the rating agencies, which upgraded the Italian government’s credit rating in 2025,” Brandolini added. A discretionary increase in the deficit, however temporary, is costly, especially for an economy with high debt and in a context of high interest rates such as the current one. From a medium- to long-term perspective, it is advantageous to focus resources as much as possible on measures that help to raise the economy’s growth potential.”
