The Italian Government of Mario Draghi approved this afternoon in the Council of Ministers the Budget law, which includes a tax cut of 12,000 million euros to workers and companies to stimulate consumption and growth that this year will exceed 6% of GDP. These are expansive budgets, with measures worth 30,000 million euros. Of these, 23,400 million will be a deficit. "It is not time to ask, but to give," Draghi has reiterated in recent weeks and has been consistent with this in the approval of his first Budgets as Prime Minister.
In a press conference, Draghi explained the main lines of this clearly expansive budget law: "We cut taxes, we improved social spending, we increased growth." The tax reduction will be in total, until 2024, 40,000 million euros. "In 2022, the drop will be 12,000 million, not 8,000 million as expected in recent days," said Draghi. The Prime Minister added that these Budgets provide for a "reorganization of social spending, following the principle of universalism, so that all workers are covered."
"Italy grows a lot"
Mario Draghi stressed that the problem of public debt is solved with an increase in growth. Hence, the Budgets have that objective, "a clear sustained and quality growth that allows the reduction of public debt." Draghi stressed that the last two quarters have been very good and so will the fourth quarter, so that "GDP growth will abundantly exceed 6%", a figure much higher than the forecasts made in previous months. The former president of the European Central Bank emphasized that "this is a very favorable moment for Italy, which we must take advantage of." Thus Draghi reflected the excellent forecasts made in the national and international economic world, once Italy has regained credibility thanks to the Government chaired by the former president of the ECB.
Mario Draghi made special emphasis on highlighting the final objective of this Budget law: «Italy is growing a lot and this law lays the foundations with less taxes, reforms and social content, to continue with a higher growth than there was before the Covid and so that there is social cohesion and more equity ”.
The former president of the European Central Bank has wanted to keep the public accounts in mind and for this he has cut the two programs that were the electoral flag of the populist parties: on the one hand, the pension reform approved by the Government of Giuseppe Conte, on a proposal by Matteo Salvini; on the other, the so-called citizenship income, which was developed by the 5-Star Movement, and the then leader of the M5E, Luigi Di Maio, said that "poverty had been eliminated in Italy." Today, in a book that Luigi Di Maio, current Minister of Foreign Affairs, has just published, he acknowledges that he made a big mistake with that populist statement.
The pension reform that the Conte Government introduced at the proposal of the Salvini League, a system known as 'Quota 100', allowed retirement at age 62, after 38 years of contributions. Draghi always said that he did not like that plan and has canceled it. After a tough meeting with the unions last Tuesday, Draghi has established that next year he will allow himself to retire at age 64, with 38 contributions. The objective is that later the retirement takes place from the age of 67, although for the moment Draghi has not been precise about the specific age to start the retirement pension. "The problem of pensions and public debt is solved by growing a lot, and these budgets lay the foundations for it," said Draghi.
As for the citizenship income ('reddito di citadinanza'), an unemployment subsidy, more than 1,000 million are destined, but there will be more controls to avoid its granting to those who do not have the right. The monthly aid was, on average, about 550 euros. Basically, a single person receives about 780 euros per month, a family with two adults and two minor children can reach 1,180 euros per month, and a large family up to 1,330 euros per month. The plan, although necessary in times of crisis, has been a failure, especially in southern Italy, as it is shown that it did not create employment, as expected, and became pure welfare, in 'bread for today and hunger for morning'. It was common for many beneficiaries of the citizenship income to reject a job offer up to three times because they preferred to continue receiving the citizenship income and complete it with a job in the black. In the absence of rigorous control, even mobsters benefited. Now, with the Draghi reform, in addition to increasing controls, there will be a progressive reduction of the allowance from the first rejection of a job offer, with suspension of the check if a job is rejected for the second time.
In addition to these two reforms on pensions and citizenship income, the unity government chaired by Draghi, of which all parties except Brothers of Italy are part, has approved another series of measures, including the postponement of the sugar tax and for plastic, the renewal of construction bonuses, health funds and resources to contain the effects of price increases in the electricity and natural gas sector.
According to the government project sent to Brussels, the Gross Domestic Product (GDP) in 2021 will grow more than 6%, compared to the 4.5% estimated in April. Public debt, which was almost 133% of GDP before the pandemic, will stand at 153.5% of GDP this year, to drop to 149.4% the following year.