The labor decree that the Meloni government intends to issue on Monday (May 1st) is ready when a cabinet meets privately: more resources to reduce the tax burden. Unions and opposition are so critical, Landini (CGIL) describes “insanity” to cut basic income (which will be replaced by two new subsidies). Giorgia Meloni is returning to Rome from London for a meeting with CGIL, CISL and UIL this evening at 19:00.
The prime minister is poised to present his new work package that could count on nearly 3.4bn for the majority in 2023, after the embarrassment of his majority in Def forcing a second frenzied parliamentary pass to allow for diversion. went to a new reduction in the tax bracket. The aim is to strengthen the purchasing power of salaries, albeit temporarily.
Cutting the tax wedge in the business decree
For this reason, eyes were turned to the 35 thousand Euro ceiling gross wages, which will come into effect in July-November, that is, the reduction of the tax wedge. The average monthly increase in payroll can fluctuate between 80 and 100 euros. For workers with a gross wage of up to 35,000 euros, the tax and social security wedge reduction will increase by another four points.
But be careful, there is an element lately that perhaps has not been properly highlighted. Intervention envisaged in the business decree (and in any case, it is necessary to wait for the final text in the official gazette) Wholesale and it will be valid for five months, July-November, instead of the eight months the government originally envisioned (May-December), (hoping to make the 4-point cut standard for everyone by the end of the year). 2023).
The intervention adds to the intervention already foreseen in the maneuver and has been in force since January, namely, a three-point deduction for employees of up to 25 thousand euros and the approval of two points in the salary bracket between 25 and 25 thousand euros. 35 thousand euros. In summary, the cutoff for the July-November period will be a total of seven points (three plus new four) and six points gross salary (two plus four) for employees with a gross salary of up to 25,000 euros. Salaries between 25 and 35 thousand euros.
How much more money will appear on the paycheck?
But in short, how many euros more than expected will appear on your paycheck? According to simulations of the De Fusco Labor & Legal study reported today by Only 24 HoursFor a worker with a salary of 25,000 euros, the 2% reduction in the social security contribution burden on the worker, carried out by the Draghi government and confirmed upwards by the Meloni government (one point more). If a benefit of 41.15 Euros per month, but an additional 4% deduction is considered to provide an advantage of 54.87 Euros, the total savings amount for the worker is 96.03 Euros per month, the figure foreseen for a one-time period of 5 months equal to: 480.13 Euros”.
In the case of a worker with an annual salary of 20,000 euros, the Draghi administration’s interventions, confirmed by the increase by the Meloni government, give an advantage of 32.92 euros, the additional cut of 4 percent of the wedge gives an additional 43.90 euros . euros, thus totaling 76.82 euros per month for the worker, while the estimated for 5 months of the year is 348.10 euros.
If we instead consider the case of a worker with a salary of 35 thousand euros, the current 2 point cut of the wedge is worth 32.85 euros. Therefore, according to the calculations of the study by Confindustria newspaper expert Enzo De Fusco, an additional deduction of 4 points is equivalent to 65.70 euros per month, which brings the total advantage in July to 98.56 euros per month in five months. 492.78 euros per month.
As stated, these are temporary interventions. Then we return to the current situation from December, but maintain the current 2 or 3 point cutoff until the end of 2023 (depends on salary). Financing the tax wedge cut in 2024 will likely be the hottest spot of the next budget bill.
What is the tax wedge deduction?
According to the definition provided by the OECD (Organization for Economic Co-operation and Development), the tax wedge is “the ratio between the amount of tax paid by an average worker and the corresponding total labor cost for the employer”. In simpler terms, it is the difference between the gross salary paid by the employer to the employee and the net salary received.
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.