By Giuseppe Fonte
ROME – The Italian government on Friday reached a deal with the ruling parties to cut income and business taxes by about 7.5 billion euros ($8.50 billion) next year, according to an amendment to the 2022 budget before parliament.
Rome will also allocate around 4 billion euros to curb energy bills for households and companies, the amendment said.
The budget, which parliament must approve by Dec. 31, targets the 2022 deficit to fall to 5.6% of national output from 9.4% this year, reflecting strong economic growth and the end of stimulus measures introduced at the height of the COVID-19 pandemic.
With international energy prices rising, Mario Draghi’s government has earmarked an additional 1.8 billion euros to try to rein in utility bills, the budget amendment shows. That comes on top of the 2 billion euros previously set aside.
A separate measure allows households to pay electricity and gas bills related to the first four months of next year in 10 instalments, to dilute the impact on family finances.
The tax cuts will be implemented mainly through a reorganisation of income tax (IRPEF), reducing the number of tax rates to four from five and increasing some tax-related benefits for low-earners.
The first tax band on annual income of up 15,000 euros will be left at 23%. The second band, between 15,000 and 28,000 euros, will be lowered to 25% from 27%.
The third band, on income from 28,000 to 50,000 euros, will get the most substantial cut, to 35% from 38%.
The fourth band, on income from 50,000 to 75,000 euros, will rise from 41% to 43%. This is the rate that is currently applied on income above 75,000 euros, effectively cancelling the fifth income tax band.
The tax reform also exempts more than 800,000 self-employed workers from paying a regional business tax (IRAP).
($1 = 0.8825 euros)
(Reporting by Giuseppe Fonte, editing by Gavin Jones and Angus MacSwan)
