Italy's Meloni hails "courageous" budget, opposition plans protests



*

Budget finds over 21 bln euros to tame energy bills

*

Taxes energy firms' extra profits at 35%

*

Includes amnesty on tax arrears, cut to retirement age

*

Relaunches bridge project connecting Sicily to mainland

By Giuseppe Fonte and Gavin Jones

ROME, Nov 22 (Reuters) -

Italian Prime Minister Giorgia Meloni presented her government's first budget on Tuesday, calling it a "courageous" package even as the opposition said it targeted the poor and planned street protests.

The 2023 budget, approved by cabinet in the early hours of the morning, focuses on curbing sky-high energy bills and cutting taxes for payroll workers and the self-employed.

It now goes to parliament, which must pass it by the end of the year.

"I consider it a courageous and coherent budget, courageous in the sense that it bets on the future," Meloni told reporters, adding that she had taken tough decisions regardless of the consequences for her new government's popularity.

The package, which contains almost 35 billion euros ($35.84 billion) of extra spending and tax cuts, aims to speed a recovery in the euro zone's third largest economy which the Treasury says will contract in this quarter and the next.

The main opposition parties dismissed the budget as inadequate to tackle recession and double-digit inflation, and accused the government of targeting the poor by cutting a "citizens' wage" poverty relief scheme for the unemployed, introduced in 2019.

Enrico Letta said his centre-left Democratic Party would organise street protests on Dec. 17, while former Prime Minister Giuseppe Conte, leader of the left-leaning 5-Star Movement, called the cuts to the citizens' wage "inhuman".

The budget allocates over 21 billion euros next year in tax breaks and bonuses to help firms and households pay electricity and gas bills. This comes on top of some 75 billion euros of similar measures approved this year.

A further 4.2 billion euros are set aside next year to cut the "tax wedge" - the difference between the salary an employer pays and what a worker takes home - with the benefit going to low income workers.

BRIDGE TO SICILY

Among numerous other measures, the budget lowers the retirement age, offers fiscal incentives to encourage hiring on open ended contracts, reduces penalties for people who have not paid their taxes, and revived plans for a

bridge

to connect Sicily to the mainland - a pet-project of Italy's right.

It also looked to encourage Italians to have more children and reverse the shrinking population, a problem often cited by Meloni, including an increase in child benefit, extra support for large families, a tweak to parenting leave and a cut in sales taxes on baby products such as nappies.

Next year's budget deficit is targeted at

4.5% of gross domestic product

, up from a 3.4% forecast made in September.

Extra borrowing will finance 60% of the 35 billion euros of economic support, while other sources of funding include an increase in a windfall tax on energy companies that have benefited from the surge in oil and gas prices.

With a tax rate rising from 25% to 35% from January to July 2023 and calculated on profits instead of revenues, the new levy will raise some 2.5 billion euros next year, Meloni said.

It follows a framework proposed by the

European Commission

and replaces a scheme that triggered

criticism and refusals to pay

from numerous energy firms.

The curbs on the citizens' wage, which the rightist coalition says discourages people from seeking work, is particularly contentious.

Next year, able-bodied people of working age will only be able to draw the benefit for a maximum of eight months, ahead of abolition of the scheme in its current form from Jan 1, 2024.

Antonio Misiani, the PD's economics spokesman, said the budget was a "war on the poor" which favoured tax evaders.

Meloni, who has always opposed the citizens' wage, insisted it was wrong "to put people who can work on the same level as those that can't".

"Faithful to our principles, we'll keep helping those who can't work. For the others it will be abolished," she said.

($1 = 0.9766 euros)



BREAKINGVIEWS-Italy’s Meloni will dodge EU collision on budget

ANALYSIS-Italy's Meloni needs urgent fix for ballooning pensions
bill

UPDATE 3-Italy PM Meloni hikes govt borrowing to tackle energy crisis

FACTBOX-Italy govt approves 2023 budget, key points



Editing by Keith Weir and Crispian Balmer

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.