Budget Bill: Meloni and Giorgetti appease their allies, but retain control over the accounts

The opposition will have an easy time of it in claiming that it is ‘insufficient’ and lacking in ‘ambition’, but it certainly cannot accuse the government of having passed an ‘electioneering’ Budget Bill. The Prime Minister herself is aware of the limitations and merits of this legislature’s final budget: “It is not a budget that solves everything – nor does it claim to – but it has a clear direction: work, family, young people, housing, the south, healthcare and cutting energy costs,” said Giorgia Meloni at a press conference.

The budget has been increased from 23.5 to 26 billion euros, with measures that were initially dropped but then reinstated at the last minute. Most notably, the second IRPEF tax bracket has been widened from 50,000 to 55,000 euros, to which a rate of 33 per cent applies instead of 43 per cent, with a maximum benefit of 500 euros per year: initially, the measure was due to extend up to the 60,000-euro threshold, but it was subsequently removed due to the high cost (2.7 billion), only to be reinstated at the insistence of Deputy Prime Minister Antonio Tajani (FI), albeit at half the original level.

More than a third of the budget, 9 billion, is earmarked for extending measures introduced last year that were due to expire: foremost among these is the 5 per cent tax relief on contract renewals, which has been warmly welcomed by trade unions such as CISL and UIL, who are not joining the CGIL in the now-routine general strike; but there are also other relief measures, such as those for farmers, and further bonuses for mothers and workers. The new measure, already approved in September as a provision applicable only for 2027, is the permanent abolition of road tax on the first car (up to 80 kW).

Among the measures included in the European energy safeguard clause, Meloni announced the installation of air-conditioning systems and heat pumps in schools, as well as energy efficiency improvements in universities and hospitals. This package will also include energy relief for SMEs and energy-intensive businesses.

There are also measures for young people, in response to the protests of recent weeks: a 1 per cent tax relief on insurance premiums of up to 2,500 euros for those under 30; a flat-rate tax of 5 per cent on rents under a rent-control scheme, which drops to 1 per cent for those under 35. For families, the package includes an extension of parental leave and a social security bonus for newborns paid into an INPS account. A total of five billion has been allocated to healthcare: 3.4 billion to increase the Health Fund and 1.6 billion for a 300-euro voucher for those aged over 75 to cover healthcare costs.

Just as Tajani was able to secure the income tax reform, the other Deputy Prime Minister, Matteo Salvini, had his demands met on pensions with an 850 million fund for flexible retirement. Much of the funding, in addition to European flexibility measures, comes from the banks: 5 billion.

In the end, every party in the majority secured a banner to wave during the election campaign, but Meloni and Giorgetti retained control of the public finances and remained in step with the European Commission, against a backdrop of international financial tension that is highly dangerous for a debt-ridden country such as Italy. With this manoeuvre, the government may not have resolved the country’s many problems, but it has certainly avoided creating an even bigger one.