Cut in the wedge, gradual extension up to EUR 40,000 in income is hypothesised

In the revised and corrected version that will be introduced by the next budget law, the cut in the tax wedge tries to change skin with a twofold objective: to become 'structural' but also to reduce the burden on social security accounts, so as not to jeopardise their balance in the medium term, as Bankitalia also stressed last Monday in the parliamentary hearing on the budget plan. The two strands, which can also be read against the light in the Chart of Accounts in which the foreword signed by Giorgetti speaks of a 'new physiognomy' for 'the effects of the tax wedge', are at the centre of a dense technical work.

Which aims at a new mix of contributory and tax cuts to maintain the same benefits in force this year for those with a pay envelope of up to 35 thousand euro gross per year ("No one will lose a euro," Giorgetti assured the Chambers) and introduce a decalage to avoid the threshold effect: a perverse effect, which according to the calculations of the Parliamentary Budget Office 1.100 euro of disposable income to those who exceed the 35,000 gross ceiling by just one euro, and consequently raises an imposing obstacle on the road to contract renewals, from public employment to metalworkers.

The solution to this tangle of problems, in the hypotheses elaborated in these days at the Finance Department, travels on a double track. The cut would remain contributory for the lowest incomes, up to 20 thousand euro according to the latest tables, and then turn into a fiscal one, with an increase in deductions for employment. Up to 35 thousand euro, as mentioned, the effects would be similar to the current ones, on average around 100 euro net per month. Then a decalage would start, rather quickly for resource reasons, which would introduce the benefit also for holders of pay envelopes between 35 thousand and 40 thousand euro, with decreasing benefits as taxable income increases.

Such a decalage would be rather quick, but in any case it would improve the picture compared to the current situation by softening what is now an overhang, open at the 35,001 euro gross income level, and a heavy disincentive to any increase in earnings for the many employees in that bracket. The novelty would affect about 1.14 million employees according to the latest tax statistics from Finance. The results of this complex construction site obviously depend on the architecture of the coverage for the manoeuvre, which will begin to show itself next Tuesday with the Programmatic Budget Document (PDB) to be sent to the EU Commission with the grid of the main measures to come and the indication of their financial effects. The fate of the other measure in the process of structural transformation, namely the three-rate Irpef tax, will also depend on the numbers: its repetition is certain and will cost about 4.3 billion, but also on the list is the hypothesis of a lowering, from 35% to 33%, of the second rate, which would require another 2.5 billion in coverage.

It all depends on the final picture of the coverage, and on the contribution to the cause that the two-year Preventive Agreement will be able to make. It is precisely this variable that is bound to keep the game open until November, even though yesterday Giorgetti indicated for the official date of 20 October the arrival of the budget law in Parliament (which can then obviously be supplemented in the House, resources permitting).