Italy: PM Mario Draghi's cabinet approves draft budget worth USD 26bn for 2022

The Italian cabinet headed by Prime Minister Mario Draghi sanctioned a draft budget worth $26 billion (23 billion euros) for 2022 on Monday, Xinhua News Agency reported. In the draft, the Draghi cabinet has indicated that the main policy framework the government has intended to follow the next year. This has also included setting aside 8 billion euros ($9.33 billion) for tax cuts and another 1 billion euro to reduce household energy bills.

By implementing the expansionary measures, Italy has aimed to enhance its economic growth from 4.2% to 4.7% next year, the Economy and Finance Ministry said in a statement. Under the current financial policy, the Ministry of Economy and Finance has laid out the main measures to stead the decreasing tax wedge and cope with the impact of the COVID-19 pandemic.

$26 billion budget: Major features

1. As per Xinhua, Rome has segregated 1 billion euros in addition to the already sanctioned 4 billion euros to steady the energy bills below the ceiling in the second half of the year. To do so, it will hand our compensations to the power companies that cap their tariffs. Additionally, similar measures will be adopted to mitigate the forecast increase of gas bills for households.

2. The draft bill has also sought to lower the difference between the employer-borne labour cost and net take-home salary for average individual workers, which is particularly high in Italy. This measure was particularly necessary due to Italy's record of touching the 5th highest tax wedge among 37 countries of the Organisation for Economic Cooperation and Development (OECD), in 2020. Currently, a single Italian worker gives away 46% of his gross salary in taxes and social contributions. Thus, the measure will help the employees, instead of the firms, to draw most of the benefit.

3. The Draghi cabinet also lowered the tampon tax from 22% to 10%. (Tampon taxes are 5% value-added tax (VAT) on women's sanitary products such as tampons and pads, which many activists have called out to be "discriminatory".)

4. Besides, the budget has also sought stimulus measures to help Italy emerge out of the economic slug. Additionally, there are also provisions for financing small businesses and procuring resources for the internationalisation of domestic enterprises.

5. The draft has also allocated 2 billion euros annual sanctions for the period of 2022-2024 to improve health and medical care facilities in Italy.

6. Last but not least, in a landmark decision, the budget also confirmed 10 days mandatory leave for paternity.

As per Xinhua, the draft has not reached a decision on the Pension Reform despite discussing it. The final statement of the draft budget has just assured that it will include "actions in the pension field to ensure a gradual and balanced transition to the ordinary regime." The cabinet is set to submit the draft budget to the European Union (EU) for review.

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