Council of Ministers gave the green light to the law enabling tax reform, which allowed personal income tax rates to go from four to three. So what changes are taking place in the salaries of Italian workers? Tax reform has a lot to address, but perhaps the most anticipated one is the reorganization of income tax brackets and rates. In other words, it is the change that will affect the salaries of Italian workers the most.
Three-rate Irpef: scenarios
Even if the declared aim of the government is to reduce the tax burden, workers are worried every time a change in the type of taxation is announced. What is known for certain at the moment is that the odds will increase from the current four to three, even if there is still no talk of numbers.
The two most plausible hypotheses are:
- leave the first ratio unchanged at 23%, combine the two plants (25% and 35%) into one plant at 27%, and leave the last unchanged at 43%;
- Raising the income bracket to 28,000 euros for the 23% rate, providing a second rate of 33% for incomes up to 50,000 euros and leaving the final rate unchanged at 43% for higher incomes.
Either way, it will be a temporary solution because the ultimate goal of tax reform appears to be a flat tax for all, which will be achieved in the next five years.
effects on salaries
In order to finance changes in Irpef rates, which would in any case result in lower tax revenues, the Government is seeking to secure coverage from the deductions and bonuses currently in effect. By tying tax breaks to income and making sure that only those who earn less benefit. Low income earners will benefit from cuts in deductions, which, among other things, will make virtually no change from the change in Irpef brackets and rates. In fact, the reduction in the tax burden of this change will not have an impact on incomes of up to €15,000, but it will reduce taxation for the so-called middle class (incomes above €28,000 and income above €15,000 in the first hypothesis). and over 28,000 euros and over 35,000 euros in the second hypothesis).
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.