The government authorized the Labor Decree a lower the control wedge by 4 percentage points, but the measure is scheduled: It will take place in July and will last 6 months. However, the executive is convinced that it can structure it, as he also reiterated Moritz Leo, Deputy Minister of Economy and Finance, interviewed by Corriere della Sera. The will of the government “is sure to stabilize the benefit” the reduction of the tax wedge introduced by the regulation of May 1st.

“The government – lion underlined – meanwhile it has strengthened the purchasing power of private households as inflation is still high. But obviously there is also a structural need, so to speak, in view of the high tax burden on employees. For this reason, it is certainly intended to stabilize the utility. There is no thought of taking away next year what has now been decided to give. However, it needs to be made clear that financial compatibilities are to be respected, which will become clearer with the Def update notice in the fall.

Now he declared “With a gross salary of 25,000 euros, there is a net profit of around 100 euros per month, including the previous cuts in the wedge. This is the maximum increase. Above 25,000 and up to 35,000, the reduction is a total of six points. In this area, the advantage over 100 euros will decrease somewhat. We can give more precise examples in the next few days.”

It should start in 2024 personal income tax cuts and wedge cuts could be included in this operation. “I believe the two paths can coexist, although careful resource assessment is required. It’s difficult to make predictions these days. However, some data allow for cautious optimism, notably the preliminary estimates of GDP for the first quarter, which signal growth of 0.5 percent, with momentum of 1.8 percent for the whole of 2023: a significantly better result than forecasts the Def (+1 percent). In addition, further savings can be quantified in a few months: “I’m thinking here of the reorganization of tax breaks and also of the income from the special profits of the energy sector”.

As for that thirteenth with fewer taxesit will fire “in 2024 when delegation will start to be implemented”Leo added. “It also provides for the incremental withholding tax for employees. I believe that the thirteenth month can be treated as “additional income” and therefore treated at the reduced tax rate of 15 percent. Among other things, this takes particular account of household consumption. It would be a very important signal, always taking into account resources and the fact that escapes to the front are not possible”.

And what about the self-employed? “Irap will be abolished for partnerships and for professional associations. Then there are the simplifications, starting with the calendar of tax deadlines. Again, for professionals using workers, we have the reduction of withholding tax on their salaries and the tax neutrality of business combinations. Proper bookkeeping partnerships can opt for IRI, making the system neutral in relation to the legal form chosen.”