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Italy readies plan to cut income taxes in 2022 budget

by Mike Robinson

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© Reuters. FILE PHOTO – Milan’s Porta Nuova and Duomo’s Cathedral can be seen May 16th, 2018, in Milan, Italy. REUTERS/Stefano Rellandini

By Giuseppe Fonte

ROME (Reuters – Italy’s government intends to reserve at least 8 Billion Euros ($9.33 Billon) in 2022 to reduce income taxes. Two sources familiar with the matter stated this.

This move will benefit workers by decreasing the tax wedge. It is the difference in the amount an employer pays and the worker’s home. Italy is especially high on this issue.

The Organisation for Economic Cooperation and Development, OECD (Organization for Economic Cooperation and Development) stated earlier in the year that Italy’s tax wedge was 46% for 2020. This is fifth highest among a group 37 developed nations.

Economists claim that the fiscal burden placed on workers is a persistent weakness in the Italian labor market. This, they say, will penalize the country’s competitiveness.

On Tuesday, Prime Minister Mario Draghi and his government will release their draft budget. This will detail additional expansionary measures totalling more than 22 Billion Euros, as well as the elimination of income taxes.

According to the Treasury, these measures aim at increasing Italy’s GDP next year from 4.2% with an unchanged policy scenario.

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