Budget 2024, news about the budget law
The Meloni government’s maneuver starts with €15.7 billion, taking it into account as a deficit, but a much larger sum will be needed to finance all the planned interventions. Part of it could come from some new fiscal measures: a global minimum tax on multinational corporations, a tax on additional bank profits, and lower tax cuts.
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Budget 2024, news about the budget law
Meloni’s government will meet next Monday morning in the Council of Ministers and discuss the budget law for 2024. This will be the first time that the ministers will officially talk about the text that is based on the economic situation defined by Nadif and will be able to benefit from the 15.7 billion euro deficit approved by Parliament, Despite opposition protests. But this money will not be enough: the government aims to reach about 25 billion euros for the budget. Therefore, among the various options to reduce expenses and increase revenues, there are also various fiscal measures: the new tax on multinational companies, the tax on additional profits of banks, and also a reduction in some tax deductions that can now be deducted from taxes.
Global minimum tax on multinational corporations
The first measure is to impose a tax on multinational corporations. This, also called a global minimum tax, arose from an OECD agreement that the EU has also adopted, and Italy will do so starting next year. In essence, those Italian-based multinationals that today pay less than this percentage are taxed at a rather low level, 15%, thanks to the conditions offered by tax havens. Deputy Economy Minister Maurizio Liu confirmed that the rules “concerning international taxes, with the application of the global minimum tax” will be discussed on Monday.
Liu said the tax has a clear purpose: “It brings in revenue.” But at the moment, there are no precise indications about how much money it could bring in. Some estimates have spoken of three billion euros, but since it is a new tax for the whole of Europe, there are no precedents to rely on, so these projections may be overly optimistic.
Nadif, the Senate also approves the budget deviation
Tax on additional profits of banks
Then there is the tax on additional profits of banks. But this is now more of a rule aimed at making Italian banks’ capital more resilient, rather than a big tax. In practice, the government stipulated that each bank may choose not to pay the tax if it uses a larger amount of money to consolidate its assets.
On paper, the banks will be required to pay 40% of their additional profits (i.e. the additional profits made in 2023 compared to 2021), because last year the ECB raised interest rates significantly and therefore they increased mortgage payments as well. And thus the revenues of banking institutions. But in practice, the existence of an alternative to not paying the tax makes it impossible to predict how much revenue the state will generate. Initial estimates before the change spoke of a figure of approximately two billion euros. However, the government has never formally expressed its opinion on how much it intends to receive from the tax on additional profits (although Minister Salvini, while announcing the rule at a press conference, spoke of “a few billion euros”).
Reduce tax deductions
Finally, there is something that cannot be considered a tax, but rather a reduction in tax deductions. This would translate, however, into more taxes to pay. The government has emphasized several times that part of the tax reform revenues can be financed by reducing tax cuts. These are deductions and deductions of various kinds that are collectively called “tax expenses.”
In 2022, these deductions totaled 626, and “cost” the state 83 billion euros in lost revenue. Another 114 relate to local taxes. But the most significant cuts are much smaller: many tax cuts certainly relate to small groups of taxpayers, because they refer to specific expenditures. Maurizio Liu estimates that the government can raise around €800 million, with a targeted reduction in tax expenditures. The government has previously committed not to reduce deductions in relation to some sectors (medical expenses, schools, energy efficiency…).
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