Italy's 2025 Budget Plan

Translated by Andrea Solazzo

Like every year, the Ministry of Economy has to present the budget manoeuvre that will condition the country's political and economic agenda. This financial document serves to define the government's economic priorities and its choices in public spending, as well as to finance public works, social policies, and projects for the entire following year.

The Meloni government's 2025 manoeuvre is about to take its final step before final approval and publication to become official. The text, in fact, will have to be presented in Parliament to be initially examined by the House Budget Committee where majority and opposition will have the opportunity to negotiate and modify its content. After the agreement reached in the Committee, the text will be discussed and voted on in the House of Representatives and then sent to the Senate Committee and subsequently also approved by the Senate Chamber by December 31, 2024.

Cutting the tax wedge and supporting families

One of the government's choices is to confirm the Irpef tax rate brackets reduced to three in past years. Minister Giorgetti declared that he has “stabilized the three rates at 23%, 35% and 43%” and that, in case there are the necessary resources, it will be possible “to work on the second 35% bracket to meet the middle class.” The Budget Planning Document reads an extension to the tax wedge cut, which is increased and made structural up to 40 thousand euros.

Initiatives in favour of families and parenting also find space. Measures on 80% parental leave are confirmed and enhanced, which will increase from two to three months, a bonus designed to support the attendance of day nursery is funded, and new resources are allocated in favour of births.

To combat the birth rate crisis and meet family needs, the government has decided to introduce a new calculation system aimed at favouring larger families. Deputy Economy Minister Maurizio Leo, speaking about deductions, said the government is moving in a logic of family quotient: "we modulate the deduction on children and income brackets: these are two factors that we keep together with greater deductions within the limits now provided".

The manoeuvre also calls for the introduction of a “New-born Card” that distributes a 1,000-euro bonus to households with ISEE within 40,000 euros. It also refinances the “Dedicated to you” card for the purchase of basic food items (with 500 million), as well as the Guarantee Fund for the purchase of the first home and the Fund for non-self-sufficiency.

Taxation to banks

To finance all the measures planned by the government for next year, provisions have been made to increase tax revenues to banks, insurance products, and in concessions on games. Already in 2023, the Meloni government had tried to implement a 40 percent tax on banks, but this had spooked the market, causing a dizzying stock market crash in domestic banking stocks. This year the measure, which Foreign Minister Antonio Tajani describes as a “contribution of the banks,” is expected to be less severe and “will not scare the markets by bringing an estimated financial effect of the induced 0.16 percent of GDP in 2025.

Ministry cuts and deficit

Economy Minister Giorgetti also called for Italian ministries to cut all unnecessary spending. In Italy there are “so many ministries, so many public bodies, including non-economic ones, that live on public contributions” and which, Giorgetti asserted, must understand that “every euro they spend is a euro they take away from citizens and businesses that pay taxes.” However, this demand, which is expected to lead to an estimated 2.4 billion euros in savings, has aroused the ire of municipalities, which, once again, are set to cut spending and resources that, in many cases, have long since been stretched thin.

It will also be necessary to increase next year's deficit from an initial estimate of 2.9 percent to 3.3 percent of GDP. However, the Ministry of Economy has reached an agreement with the European Commission on a plan to reduce the national deficit annually over a seven-year period.

The healthcare sector

One issue that has long been the subject of clashes is the allocation of new resources for health care. The promised spending of 3.5 billion, pronounced by Prime Minister Giorgia Meloni, has been unfulfilled since the Programmatic Budget Document provides for an allocation of additional funds of only 900 million euros in 2025 and another 3 billion (to be found) for 2026.

This is a far cry from expectations that also disappointed Health Minister Orazio Schillaci, who was expecting 4 billion euros to be spent by 2025. The funding of the National Health Fund will thus reach 136.5 billion in 2025, a slight increase that, however, hides a bitter truth. In fact, if we look at the ratio of healthcare spending to national GDP, it stands at 6.3 percent, one of the lowest values of all Western countries, below the OECD average (6.9 percent) and the European average of 6.8 percent.

The approximately 25 billion budget manoeuvre can still be modified in these months at the behest of the majority or in agreement with the opposition and must be voted on and approved by the December 31 deadline.

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