Crisis reaction in Italy: Prime Minister Meloni initiates the abolition of citizen income

The state budget for the coming year is not only being tightened in Berlin these days, but also in Rome. In Italy, as in Germany, there is a dispute about “citizen money”. In response to the widespread crisis, Prime Minister Meloni is cutting social spending.

The relatively new Italian government headed by Giorgia Meloni has approved the budget for 2023, focusing on the fight against rising energy prices and tax breaks. The core of the financial planning is an aid package of 35 billion euros to support families and companies that are particularly hard hit by high energy prices.

Instead of fighting poverty: Italy wants to spend 15 billion euros in tax money on energy costs

Instead of fighting poverty: Italy wants to spend 15 billion euros in tax money on energy costs

In return, the citizens’ income, which was only introduced by the Five Star Movement in 2019, is to be almost completely abolished in the coming years. Meloni and her current coalition partners had already started the election campaign with this topic. Starting next year, citizens’ allowances (“Reddito di Cittadinanza”) will be paid to Italians who the government deems fit for work for a maximum period of eight months. From 2024 it will be completely eliminated. Even if a “reasonable” job offer is rejected, the citizen’s income should be abolished, according to the government.

Meloni also announced a more detailed review of citizen benefit payments – for example for older citizens. For his part, Giuseppe Conte, leader of the Five Star Movement, announced that he wanted to fight for the retention of citizen income and take protests against the government’s plans onto the streets. The budget still has to be approved by both chambers of the Italian parliament. But since Meloni’s coalition has a majority in each case, the cutback plans should go through.

Most of the €35 billion in aid will come from new debt. 21 billion of this is to be used to cushion the rise in energy prices. But as early as December, the Meloni cabinet intends to withdraw measures to lower petrol prices. Then only 15 cents subsidy per liter should flow – last time it was 30 cents. An increase in fuel prices in Italy is therefore foreseeable.

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Matteo Salvini and Silvio Berlusconi, who until a few months ago had called for a “flat tax” for all Italians, were not able to assert themselves. However, the upper income limit was raised to 85,000 euros, but only for freelancers. Below that, a fixed tax rate of 15 percent will apply in the future. Previously, the upper limit was 65,000 euros. The minimum pension is to be increased by around 20 percent.

With the restrictive spending policy, Meloni’s budget law has largely remained true to the business-liberal and capital-friendly line of his predecessor Mario Draghi, who had presented a similarly sized budget.

Meloni, who is also the leader of the post-fascist party Fratelli d’Italia, said on Tuesday – like that Handelsblatt – praised for their own “bold and consistent actions” because they would “encourage growth”. Carlo Bonomi, head of the industry association Confindustria, had criticized the plans: “It is clear that certain interventions are being made to respond to election promises,” he explained. But the real needs of companies are different.

more on the subject – Italy suffers from the highest inflation since 1984

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