The combined effect of the cut in the tax wedge and the new Irpef could put up to 120 euros more per month into the pockets of middle-low-income Italians. With this double move to be included in the budget, the Meloni government aims to support the weakest segments of the population by attracting a significant part of the 14 billion Nadef treasury. Let’s try to better understand how salaries may change with the 2024 budget law.
Accountants up to +120 euros per month from wedge and new Irpef
Support for low incomes is one of the priorities to which the government plans to direct budget resources. The executive is considering two major interventions: the extension of the tax wedge reduction and the reduction of Irpef to three rates. This double move could put up to 120 euros more per month into the pockets of Italian workers. This is what emerges from the simulations formulated by the National Accountants Foundation and approved by Deputy Minister of Economy Maurizio Leo.
Leo: “The goal is to act together”
Combining the cut in the tax wedge with the new three-rate IRPEF, in particular the reduction of the rate from 25 percent to 23 percent for the second income group, ranging from 15 thousand to 28 thousand euros, could translate into payroll benefits, from at least 22 euros for incomes above 35 thousand euros per month. , ranging up to 120 euros for incomes up to 35 thousand euros.
Deputy Minister of Economy Leo explained that the calculations are still ongoing, but they estimate that “the monthly benefit will be approximately 120 euros.” In addition to the new Irpef, the government also aims to approve the tax cut for 2024, which has been in force for around 14 million workers since July (7 points less for incomes up to 25 thousand euros and 6 points less for those up to 35 thousand euros). Leo underlined that the aim is to “act together”.
According to accountants’ calculations, the improvement effect on the monthly salary of a worker with an income of up to 15 thousand euros will remain unchanged at 67 euros with the new Irpef. The double benefit will only occur for incomes between 20 thousand and 35 thousand euros. In the 20 thousand euro bracket, it will be possible for the 77 euro deduction to increase to 84 euros per month due to the new Irpef rate. A worker earning 25 thousand euros a year could instead earn 112 euros more per month; 96 euros of this is from the wedge deduction and the rest is as a result of the new Irpef rate. The same effect applies to those who earn 30 thousand, an increase of 22 euros compared to the 90 euro benefit brought by the wedge cut alone. The biggest impact will be for those with incomes of 35 thousand euros: between the reduction of the tax wedge and the Irpef reform, they will be able to receive around 120 euros more per month in salary compared to the current 99 euros. However, over 35 thousand euros it will be only 22 euros more than the new Irpef rate. Calculations may change if other revenue measures, such as a tax cut on thirteenth salaries, are approved, but all remains to be seen.
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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.