Budget, Bank of Italy: "It does little to address inequality." Istat: "Income tax cuts favor the wealthiest."
ROME – The final day of Senate hearings on the budget has begun. Since Monday, more than 70 associations, organizations, institutions, and trade groups have expressed their concerns about the Meloni government's budget law. Today, it was the turn of Istat, Cnel, Bank of Italy, Court of Auditors, and the UPB . Economy Minister Giancarlo Giorgetti concluded this first phase of the parliamentary process for the budget bill.
Upb: "Fiscal drag more than offsets between 10,000 and 32,000 euros."
The reforms for the 2021-26 period "have increased the progressivity of personal income tax and increased the system's redistributive capacity," UPB President Lilia Cavallari emphasized this during her parliamentary hearing on the budget, proposing a comparison with a possible indexation-only approach. "By comparing the tax due in 2026 (applying the budget law's proposals)," he explained, "with the tax that would have been paid if the tax system had been merely indexed starting in 2021, it is possible to identify effects and advantages. The system that would come into force in 2026 would more than offset the effects of the tax burden for employment incomes between 10,000 and 32,000 euros: the post-budget law reform system results in lower average rates (by approximately 2-3 percentage points) than those that would have been recorded with the simple indexation of the 2021 system. For incomes between 32,000 and 45,000 euros, the compensation would be partial. For incomes above 45,000 euros, the difference between the two systems gradually becomes negligible." "For pensioners and self-employed workers," UPB argues, "the reforms have instead brought limited benefits, with only a partial recovery of the tax burden for incomes up to 40,000 euros."
Upb: "Risks of scrapping"
"Although the propensity to evade is decreasing, tax evasion is still a widespread phenomenon (approximately €100 billion in 2022), and the budget bill addresses this issue only marginally," UPB President Lilia Cavallari emphasized during a hearing on the budget. "The recurrence of measures for the simplified settlement of pending charges has contributed to making the enforced collection system increasingly diverse and complex, with uncertain results in terms of revenue. Furthermore, they do not appear to have significantly impacted the inefficiencies of enforced collection. There is a risk," UPB warns, "that the repeated introduction of forms of simplified settlement will negatively impact tax compliance, fueling expectations of future forms of relief and ultimately leading to a reduction in ordinary collection."
UPB: "With IRPFE cuts, €408 for managers, €23 for workers"
The two-point reduction in the personal income tax rate "will affect just over 30% of taxpayers (approximately 13 million, with an income of over €28,000), resulting in a reduction in personal income tax revenue of approximately €2.7 billion, a figure slightly lower than that reported in the Technical Report." This is what UPB President Lilia Cavallari noted during her parliamentary hearing on the budget. "Approximately 50% of the tax savings will go to taxpayers with incomes above €48,000, representing 8% of the total," she added, specifying that "the average benefit is €408 for managers, €123 for white-collar workers, and €23 for blue-collar workers; for self-employed workers, it is €124, and for pensioners, €55." As for the compensation of benefits for high incomes (above 200,000 euros), "it will affect approximately a third" of the group, 58,000 taxpayers - he explained - since "the group is already affected by previous provisions: on average, the deduction cut for this bracket is 188 euros, below the 440 which is the maximum benefit of the measure."
C. Conti: "It's good that the budget is prudent, but we need to do more to improve growth."
This is "an overall prudent measure, consistent with the needs of a country that must bring public debt and deficits under control and consolidate financial market confidence," and "the goal of early exit from the infringement procedure, starting in 2025, appears significant in this regard," said Mauro Orefice, chair of the coordination committee of the Joint Sections of the Court of Auditors' oversight committee, at the conclusion of the hearing on the measure.
"The direct effect of a moderate allocation of resources to combat poverty and support earned incomes should also be positively considered," he added. However, he noted, "an investment policy based on past experience cannot fail to attract attention, as it appears to require reconsideration for the purposes of long-term growth projections. The approaching conclusion of the NRRP and its imminent revision raises the need to launch a new era of policy planning that, going beyond the focus on reallocating resources and regaining spending efficiency, is geared towards more effectively supporting the country's recovery and infrastructure growth."
C. Conti: "Short-term rental law risks increasing black market activity"
"The difference in tax regimes could have a negative impact by encouraging undeclared short-term rentals," said Mauro Orefice, chair of the coordination committee of the Joint Sections of the Court of Auditors' oversight committee, during a hearing on the budget, commenting on the budget law's measures regarding short-term rentals, which raise the flat-rate tax rate from 21 to 26 percent.
C. Conti: "Scrapping raises tax risk for defaulting financiers"
Regarding the scrapping of tax returns, "the new rules partially diverge from previous legislative interventions because they limit the possibility of resorting to the simplified settlement only to cases in which the taxpayer has failed to pay income and value added taxes, which are still subject to a tax return, and to formal and paper-based assessments of the returns."
But "even if the scope is limited," the intervention "still faces critical issues, repeatedly highlighted by the Court, and, in particular, the possibility that the measure could reduce tax compliance, the risk that the Treasury could become a 'financier' of delinquent taxpayers, incentivizing non-payment as a form of liquidity, and the uncertainty about the effects on public finances." This was stated by Mauro Orefice, chair of the coordination committee of the Joint Sections of the Court of Auditors' oversight body, during a hearing on the budget.
C. Conti: "Ambitious spending, rising to €7 billion a year"
Resuming and intensifying a spending reduction path is an essential condition for ensuring the gradual reduction of debt, a goal to be achieved, within the framework of the new rules of European economic governance, through a clearly defined path of net spending financed at the national level. In this context, the new cuts included in the budget make the goal of the spending review particularly ambitious.
This was stated by Mauro Orefice, chair of the coordination committee of the Joint Sections of the Court of Auditors' oversight committee, during a hearing on the budget. "These provisions," he added, "are in addition to those already included in previous budget laws, thus increasing the impact on each financial year 2026-2028 to over €7 billion (approximately €22 billion over the three-year period in question)."
C. Conti: "The budget lacks measures to address tariffs."
"In relation to the internationalization of the business system, an increase in some funds is planned, while no measures have been outlined to address the crisis situations and tensions generated by the "tariff policy" that is becoming established internationally." This was stated by Mauro Orefice, chair of the coordination committee of the Joint Sections of the Court of Auditors' oversight committee, during a hearing on the budget.
The Court of Auditors also notes that "a measure to support the tourism sector is being proposed once again, to increase its attractiveness and allow for a deseasonalization that will allow for the redistribution of flows to different periods of the year or to locations that were previously only marginally affected. This measure was already envisaged in the 2025 budget law but has remained unimplemented due to the failure to adopt implementing measures."
Bank of Italy: "Large loss of purchasing power, only 3 points recovered."
"From 2019 to 2023, there was a significant loss of purchasing power of 10%, which has since been recovered by only 3 percentage points. Continuing with decisions already made in recent years, the budget includes measures to support household income. These measures, even when temporary, can be useful in supporting purchasing power, which has been severely impacted by inflation in recent years," stated Fabrizio Balassone, Deputy Head of the Bank of Italy's Department of Economics and Statistics, during a hearing on the budget before Parliament's Budget Committee.
"The interventions for the 2022-25 period have, in fact, more than offset the negative impact of fiscal drag and the erosion of transfers. Recovering family incomes," he adds, "however, cannot be achieved through fiscal interventions alone; it must be based on an effective bargaining system and, ultimately, on increased productivity."
Bonelli (Avs): "Istat confirms that the IRPEF cut is a gift to the rich."
"The ISTAT data from the budget hearing confirm what we've been denouncing for weeks: the Meloni government's personal income tax cut is a gift to the richest, a measure that increases inequality and ignores the realities of the country. In Italy, nearly 5.7 million people live in absolute poverty, a condition that affects 9.8% of the population. Instead of addressing this dramatic situation, Meloni and Giorgetti are choosing to reward those who are better off, while simultaneously cutting healthcare, education, and the ecological transition." This was stated by Angelo Bonelli, MP for the Alleanza Verdi e Sinistra (Green Alliance) and co-spokesperson for Europa Verde (Green Europe).
The healthcare picture is equally alarming: in 2024, nearly 5.8 million Italians will have forgone treatment, largely due to waiting lists, which have grown from 2.8% in 2019 to the current 6.8%. The propaganda talks about growth and lower taxes,” Bonelli concludes, “but millions of Italians won't see a single euro more and will continue to forgo treatment. This is an unfair move, one that tramples on tax progressivity and the universal right to healthcare. Italy doesn't need handouts to the rich, but social justice and a true revitalization of public healthcare.”
Bank of Italy: "It's best not to overly affect pension adjustments."
Regarding pensions, "it would certainly be better not to touch this adjustment mechanism too much." Fabrizio Balassone, Deputy Head of the Bank of Italy's Department of Economics and Statistics, stated this during a hearing before the Budget Committees of the Chamber of Deputies and the Senate, responding to a question about pensions in the budget. "There's a generational equity issue," he observed, "and we have this increase in spending that could significantly complicate the management of public finances."
Bank of Italy: "Business incentives averaging €2.3 billion annually."
"The budget includes incentive measures for business investment amounting to an average of €2.3 billion per year over the three-year period. These measures largely replace or extend similar measures that are expiring," said Fabrizio Balassone, Deputy Head of the Bank of Italy's Department of Economics and Statistics, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate.
The Bank of Italy cites hyper-depreciation, noting among other things that "for businesses with taxable income, given the same investment value, the new measure should in most cases guarantee greater savings than those achievable with expiring incentive schemes. However," it concludes, "the benefits would be more uncertain for loss-making businesses or those with insufficient profits, such as young or rapidly growing ones. In general, the effectiveness of incentive measures is affected by the uncertainty arising from the frequency of regulatory changes."
Bank of Italy: "NRRP review should be accompanied by spending acceleration."
"Given the approaching expiration date" of the NRRP, "it is important that this latest revision be accompanied by a significant acceleration of spending." Fabrizio Balassone, Deputy Head of the Bank of Italy's Department of Economics and Statistics, stated this during a hearing on the budget before the joint Budget Committees of the Chamber of Deputies and the Senate. "As is well known," he explained, "governments can modify their plans during implementation if they can no longer be implemented, in whole or in part, due to objective circumstances. Excluding the ongoing reprogramming, Italy has so far made use of this option five times. Revising plans is a common practice among the countries that have benefited from the NextGenerationEU program: France has modified it once, Germany four times, and Spain six times."
Bank of Italy: "Uncertain effects and limited wage relief"
The tax relief measures on contract renewals "raise uncertainties regarding the actual implementation of the measure in relation to the definition of the salary increase subject to a reduced rate, the scope of the beneficiaries, and the actual access procedures." This was stated by Fabrizio Balassone, Deputy Head of the Economics and Statistics Department of the Bank of Italy, during the hearing on the budget before the joint Budget Committees of the Chamber of Deputies and the Senate.
Bank of Italy: "Avoid constant changes in bank taxes."
"It would be appropriate to avoid frequent recurrence of unexpected changes in taxation" on banks. This was emphasized by Fabrizio Balassone, Deputy Head of the Bank of Italy's Economics and Statistics Department, during the hearing on the budget before the joint Budget Committees of the Chamber of Deputies and the Senate.
Pensions, Bank of Italy: "Since 2001, retirement age has increased by five years."
"In Italy, the effective average retirement age increased by over five years between 2001 and 2024, to 64.6 years;17 the labor market participation rate in the 55-64 age group more than doubled, from 28.2 to 61.3 percent. However, pension expenditure as a percentage of GDP is still the highest in Europe, reaching 15.6 percent in 2022, compared to an average of 11.4 percent." This was stated by Fabrizio Balassone, Deputy Head of the Economics and Statistics Department at the Bank of Italy, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate.
The mechanism for indexing retirement age to longevity, Balassone emphasized, "was introduced to rebalance the relationship between working time and retirement across generations; it will help limit the growth in pension spending driven by population aging in the coming years. According to European Commission forecasts, the current legislation would halt the growth in spending as a percentage of GDP in 2036, when it would peak at 17.3 percent, before declining and stabilizing at around 13.7 percent in 2070, the last year for which estimates are available."
Bank of Italy: "It doesn't increase the effectiveness of debt collection."
"The budget opens the way to a new 'scrapping': a tool that in the past has failed to increase its effectiveness in revenue recovery," Fabrizio Balassone, Deputy Head of the Bank of Italy's Economics and Statistics Department, emphasized this during the hearing on the budget before the joint Budget Committees of the Chamber of Deputies and the Senate.
"According to official estimates," he noted, "based on a 3.33 percent acceptance rate estimated based on previous debt relief programs and taking into account potentially affected items (just under €400 billion), acceptance should cover tax debts amounting to approximately €13 billion, one hundredth of the residual accounting burden of the roles assigned by various creditor agencies to the Revenue Agency-Collection, for the period January 1, 2000, to December 31, 2024. This figure is approximately double if we exclude those for which, according to the collection agent, there is no expectation of recovery."
Budget, Bank of Italy: "Little focus on inequality."
Overall, it can be estimated that the measures included in the budget to support household income "will not lead to significant changes in inequality in the distribution of equivalized disposable income among families." This was stated by Fabrizio Balassone, Deputy Head of the Bank of Italy's Department of Economics and Statistics, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate.
The reduction in the personal income tax rate for the second income bracket benefits households in the top two-fifths of the income distribution, but with a modest percentage change in disposable income. The effects of the main social assistance measures, however, are concentrated on the top two-fifths of households and are also modest," he explained.
Bank of Italy: "Negligible effects on net debt"
"According to official estimates, the budget, as indicated in the Public Finance Planning Document in October, will have negligible effects on net borrowing in 2026, while it will moderately widen the deficit compared to current legislation in the following two years (by just under €6 billion and approximately €7 billion in 2027 and 2028, respectively, equal to an average of 0.3 percentage points of GDP per year)." This was stated by Fabrizio Balassone, Deputy Head of the Economics and Statistics Department at the Bank of Italy.
Bank of Italy: "Income tax cuts will reduce revenue by €3 billion."
"The reduction of the second income tax rate from 35 to 33 percent will result in a €3 billion annual reduction in revenue. Taxpayers with a total income of more than €28,000 would benefit, increasing to a maximum of €440 per year for incomes of €50,000 or more. For incomes above €200,000, the benefit could be reduced, even to zero." This was stated by Fabrizio Balassone, Deputy Head of the Bank of Italy's Economics and Statistics Department, during a hearing before the Budget Committees of the Chamber of Deputies and the Senate.
Cnel, Brunetta: "The contract law is a good thing."
"The budget also stands out for its attention to productivity, purchasing power, and collective bargaining, with the aim of supporting more inclusive growth and enhancing work as a competitiveness driver. The measure providing for tax exemptions on wage increases resulting from the renewal of national collective bargaining agreements is a step in the right direction to promote first-level collective bargaining, recognizing its role as a fundamental tool for protecting and defending workers' purchasing power." This was stated by CNEL President Renato Brunetta during the hearing on the budget before the joint Senate and Chamber of Deputies Budget Committees.
Budget, CNEL: "Oriented toward early return"
"The budget law focuses on the strategic objective of allowing Italy to exit the excessive debt infringement procedure early, in the belief that sound public finances are a key factor in stability, credibility, and international standing." This was stated by CNEL President Renato Brunetta during a hearing before the joint Senate and Chamber of Deputies Budget Committees on the budget.
Cnel, Brunetta: "We need adequate incomes and targeted investments."
"Italy is called to rebalance its growth model, supporting domestic demand through targeted public investment, innovation, and adequate wages." This was stated by Renato Brunetta, President of the National Council of Economic and Social Councils (CNEL), during a hearing before the joint Budget Committees of the Senate and the Chamber of Deputies on the budget.
Cnel, international context between tensions and uncertainties
"The international context surrounding the budget plan remains complex, characterized by stringent European constraints, geopolitical tensions, and high economic uncertainty. Growth in the euro area remains weak, held back by households' high propensity to save—a sign of widespread uncertainty—and by a still insufficient capacity to generate and spread innovation, as underscored by the Draghi Report." This was stated by Renato Brunetta, President of the National Council of Economic and Social Councils (CNEL), during a hearing on the budget before the joint Senate and Chamber of Deputies Budget Committees.
Istat, 10% don't care
"In 2024, 9.9% of people said they had given up on seeking treatment due to waiting lists, financial difficulties, or the inconvenience of healthcare facilities: this represents 5.8 million individuals, compared to 4.5 million in the previous year (7.6%)," said ISTAT President Francesco Maria Chelli.
Istat: Real wages still lower than in 2021
"The recent acceleration in contractual wage growth, which began in the second half of 2023, has not made it possible to recover the loss of purchasing power caused by the extraordinary price increases of the two-year period 2022-2023; in fact, at the end of September 2025, gross contractual wages in real terms are still more than 8% lower than those of January 2021," said Istat President Francesco Maria Chelli.
Istat: ISEE changes lead to benefits of 145 euros
The changes envisaged in the budget law to the ISEE calculation "result in an average annual benefit of €145 for approximately 2.3 million families (8.6% of resident families). From a distributional perspective, the average benefit is higher for the poorest families" at €263, resulting in an average change in family income of 2.2%. This was stated by ISTAT President Francesco Maria Chelli, during a hearing before the joint Budget Committees of the Chamber of Deputies and the Senate on the budget.
Istat, maternity bonus for 865,000 working women
For the maternity bonus, which the budget increases to 60 euros per month, it is estimated that approximately 865,000 women workers will benefit, a quarter of all workers with children (3.5 million). Assuming a 100% participation rate, the average annual individual benefit will be nearly 660 euros (60 euros per month multiplied by the number of months worked), for a total cost of approximately 570 million. This was stated by ISTAT President Francesco Maria Chelli, speaking before the Budget Committees of the Chamber of Deputies and the Senate regarding the maternity bonus.
Istat: 85% of IRPEF resources cut for wealthier families
By sorting families by equivalized disposable income and dividing them into five groups of equal size, it emerges that over 85% of the resources are allocated to families in the richest fifths of the income distribution: over 90% of families in the richest fifth and over two-thirds of those in the second-to-last fifth are affected by the measure. The average income ranges from €102 for families in the top fifth to €411 for families in the bottom fifth. For all income groups, the benefit represents a change of less than 1% in family income.
Istat: Average family income is 276 euros.
The IRPEF reduction envisaged by the budget would affect just over 14 million taxpayers, with an average annual benefit of approximately €230. Approximately 11 million families (44% of resident families) would benefit, with an average benefit of approximately €276 (each family can have more than one taxpayer). This was revealed by ISTAT at the hearing.
Istat: 14 million taxpayers to face Ipref cuts
The budget law measure that raises the personal income tax rate for income brackets between €28,000 and €50,000 to 33% from 35% "would affect just over 14 million taxpayers, with an average annual benefit of approximately €230. Approximately 11 million families (44% of resident families) would benefit, with an average benefit of approximately €276," as "each family can have more than one taxpayer." This was stated by ISTAT President Francesco Maria Chelli, during a hearing before the joint Budget Committees of the Chamber of Deputies and the Senate on the budget.
Istat, GDP up 0.5%
Following the quarterly GDP data, Istat recalls that growth achieved for 2025 is 0.5%. President Francesco Chelli stated this during a hearing on the budget, noting that quarterly GDP estimates are net of interannual differences in working days and that overall, 2025 will have three fewer working days than 2024.
Budget, today's hearing schedule
The schedule of preliminary hearings for today, the last, in the joint Budget Committees of the Chamber of Deputies and the Senate. They begin at 9:00 a.m. with Istat, followed by the Cnel (9:45 a.m.), the Bank of Italy (10:30 a.m.), the Court of Auditors (11:30 a.m.), the Upb (12:30 p.m.), and Economy Minister Giorgetti (2:30 p.m.).
INPS absent: "No invitation"
The Social Security Institute says the invitation hasn't arrived, and so today, unlike last year, President Gabriele Fava won't be present. The chairman of the Senate Budget Committee, Nicola Calandrini (FdI), explains that "INPS is not among the institutional bodies that are invited regardless, like ISTAT and the others." Therefore, "INPS is heard if it asks to be heard and hasn't requested it: no exclusion or selection." Yet it doesn't seem like things have gone this way in the past. "It was always the parliamentary committee that called me on the budget law," says former INPS president Pasquale Tridico , now a Five Star Movement MEP. Tito Boeri , another former member of the Institute, also says: "I never asked to be heard, but I sometimes wasn't called." Yet there are issues to discuss: from the employment package to the pensions package, with the Meloni government's decision not to halt the increase in retirement age and contributions. That will be for another time. by Valentina Conte
The budget approved by the Council of Ministers
The Meloni government approved its fourth budget of the legislative session in the Council of Ministers. The scrapping of tax bills and cuts to personal income tax, along with pensions, are among the most costly measures in a very light budget, amounting to just €18.7 billion. Several points still need to be ironed out, not only due to opposition criticism but also to disagreements within the majority itself.
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