The government’s three-card trick regarding public finances (and the Safe). Misiani (PD) writes to us

To the Editor – The government has requested and secured an additional deficit of 29 billion for the two-year period 2027–2028, invoking the national safeguard clause for defence and energy. Yet Minister Giorgetti, in his statements to Parliament, has given absolutely no explanation of how he intends to use these funds: no priorities, no political accountability. In effect, we can be certain that over the next two years the government will incur further debt. We know that half of this additional debt will go towards increasing the national defence budget (a disproportionate and unacceptable allocation of resources, which completely disregards the economies of scale that would be possible at European level). As for the rest, the government has not yet decided anything.

The confusion reigning between Palazzo Chigi and Via XX Settembre has been vividly illustrated in recent hours. The Council of Ministers approved the Budget Policy Document to be sent to Brussels, but the Budget Bill was not ready. The draft bill had also appeared on the initial agenda; a few hours later it had vanished, and Palazzo Chigi referred to it as a ‘clerical error’. Confusion reigns supreme within government buildings, yet Giorgia Meloni has travelled to Brussels to request further flexibility. This is a rather implausible request, in light of two facts that are rarely discussed. The first is fiscal drag, which is becoming increasingly crucial to the balance of public finances. The Prime Minister complains about the rigidity of EU rules, which do not take into account the effects of inflation on the expenditure side. However, she fails to mention that the State is raking in billions – again thanks to inflation – as a result of fiscal drag: between 2026 and 2029, IRPEF taxpayers – largely employees and pensioners – will face, according to MEF estimates, an additional levy of over 35 billion, due to the failure to index IRPEF to inflation. The government reaps these funds without claiming responsibility for the measure: it is the most convenient tax; nobody announces it, but almost everyone pays it. Meanwhile, the ruling majority promises to raise the flat-rate tax threshold for the self-employed and professionals to 100,000 euros. Those who cannot choose their tax regime are squeezed; those who can opt out receive a substantial tax break that is both unfair and unjustifiable.

The second point concerns Safe. Italy had access to 15 billion in European loans on favourable terms, which it had stated in recent months that it intended to use in full to finance already planned defence expenditure. In the end, it will use just over half of this amount. Forgoing a cheaper source of funding means – as Luciano Capone pointed out in Il Foglio – foregoing savings on the cost of debt running into several billion. An ideological decision, entirely devoid of economic logic.

Herein lies the contradiction. On the one hand, Meloni and Giorgetti say that Europe needs room for manoeuvre and flexibility; on the other, they are raking in the bulk of their revenue from tax extraction whilst leaving the most cost-effective European instruments on the table. If the problem is a shortage of resources, why reject the least expensive options? If it is inflation, how credible is it to complain about its impact on the expenditure side whilst benefiting from it on the revenue side?

New debt is being sought, decisions are being postponed, costs are being passed on to those who cannot escape progressive taxation, and even opportunities offered by Europe are being turned down. This is not the economic policy of those who know where they are going, but of those who are playing it by ear until the next general election.