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Italy’s Draghi cuts taxes, raises retirement age in first budget -Breaking

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© Reuters. After the Italian cabinet approved its 2022 budget in Rome on October 28th 2021, Mario Draghi, the Prime Minister of Italy, speaks at a press conference. REUTERS/Remo Kasilli

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Giuseppe Fonte and Angelo Amante by Gavin Jones

ROME (Reuters) – On Thursday, Mario Draghi, the Italian Prime Minister presented his first budget. He aims to reduce next year’s public debt while reducing income tax.

Draghi took office as the leader of a government of national unity in February and stated that the reductions in taxes would be 12 billion euros ($14billion), more than the figure of 8 billion in previous drafts.

From 9.4% in 2017, the 2022 deficit will be 5.6%, which is a result of strong economic growth as well as the ending of stimulative measures at the peak of the COVID-19 epidemic.

Following a 3 hour cabinet meeting which approved the package, Draghi stated to reporters: “This is an expanding budget that will help the recovery.”

“We’re cutting taxes, encouraging investments, improving social spending and paying special attention to women, young people and the environment,” he stated, noting that this year’s economic growth would surpass Rome’s official estimate of 6%.

Draghi stated that the tax reductions projected would be 40 billion euro between 2022-2024. This will help to ease the fiscal burden on the Italian workforce.

Organisation for Economic Cooperation and Development estimates that the average Italian employee lost 46% in taxes and contributions between 2020 and 2025. It is fifth in a group 37 countries with advanced economies.

Also, the budget increased the retirement age for next year. It stipulates that Italians can draw a pension starting at 64 if they have contributed minimum 38 years.

This new “quota 100”, which was in effect for three years and which allowed retirement to be possible at 62 with only 38 years of contributions, raises the retirement age two years.

Draghi’sfractious coalition is roiled by tension over the matter, however the right-leaning League party that co-rules the government — and was the principal supporter of Draghi’s quota 100 scheme — stated it was happy with the proposed arrangement for next year.

Draghi continues to work with trade unions and the ruling party in search of a long-term solution.

Eurostat data shows that Italy, which has the largest population of its age, spends far more money on pensions than any other European country, with Greece being the exception. The Treasury reports that Rome’s 2020 pension bill was 17% of the country’s total output, a new record.

Draghi’s government cannot remain in power until at least 2023. He stated that he wanted to make sure future pension payouts were based solely on the amount of people who have contributed into the system.

Draghi’s coalition faces another problem: the poverty relief scheme for “citizens’ income”, promoted by 5-Star Movement. Draghi claimed that the plan would be revised to “prevent abuses.”

Draghi stated that the government would increase its scrutiny of fraudulent claims for welfare benefits. If a beneficiary refuses to accept two job offers, they will have their benefit withdrawn. For those people who can work, it will then be gradually decreased after six months.

The application of new taxes on sugary drinks and plastics, which were originally scheduled to take effect at the beginning 2020, is being delayed to 2023. [nL8N2RH5AL]

($1 = 0.8562 euros)

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