Italy’s government is taking on the challenge of increasing tax revenue from companies in order to address a €9 billion deficit in the country’s financial plan. With a focus on supporting low and middle-income earners, Finance Minister Giancarlo Giorgetti aims to collect an additional €4 billion by adjusting tax thresholds and removing deductions for businesses.
The budget for 2024 includes significant payroll tax cuts promised during Prime Minister Giorgia Meloni’s campaign. However, the administration must also meet EU demands to reduce its budget deficit, which reached 7.2% of GDP in 2023. Italy’s public debt has also been a major concern, standing at 137.3% of GDP.
The government faces the task of reducing this debt while stimulating economic growth and fulfilling electoral promises. Despite a recent revision reducing the debt ratio by three percentage points, Italy’s debt-to-GDP ratio remains high compared to other European economies.
Italy’s Economic Challenges
Projections indicate a modest decline in the debt ratio from 140.2% in 2023 to 139.6% in 2026. The success of Italy’s fiscal policies will have significant implications for its economic future within the European Union.