The 26 billion euro budget maneuver approved: Irpef cut and extended flat tax.

The Meloni government approved the Budget Law for 2027 in the Council of Ministers yesterday, a package of measures worth 26 billion euros. Prime Minister Giorgia Meloni presented the budget plan at a press conference alongside Deputy Prime Ministers Tajani and Salvini and Ministers Giorgetti and Leo, describing it as a plan with "a clear direction."

Key measures include a cut in Irpef (personal income tax) for the middle class, extending the second tax bracket (33% rate) from 50,000 to 55,000 euros of income, and extending the 15% flat tax for self-employed workers up to 100,000 euros in revenue. Additionally, 5 billion euros are allocated for healthcare, an 850 million euro fund for voluntary retirement at age 64, and the confirmation of bonuses and incentives worth 9 billion euros.

The budget is financed more than half through deficit spending, utilizing a European safeguard clause for defense and energy expenditures, resulting in a total of 14 billion euros in new debt. Additional resources come from a levy on the financial sector (5 billion euros), energy and gaming companies (700 million euros each), and an increase in the tax on financial transactions (Tobin tax) from 0.2% to 0.6%.

The Budget Law, or "financial maneuver," is the main instrument through which the Italian government defines public revenues and expenditures each year, establishing economic and social policies. The process begins with the approval of the draft law by the Council of Ministers, which is then transmitted to Parliament for review and a final vote by the end of the year. The 2027 maneuver arrives at a particular moment: the Meloni government, sworn in on October 22, 2022, has just passed the four-year mark, becoming the first executive in republican history to reach this milestone.

The context of this maneuver is marked by the electoral promises of the majority parties and the need to negotiate with the European Union on deficit limits. Forza Italia, with Deputy Prime Minister Antonio Tajani, pushed for a cut in personal income tax (Irpef) for the middle class, while Matteo Salvini's League secured the extension of the favorable flat-tax regime for self-employed workers. Negotiations with Brussels remain open precisely on this point, as current European rules do not allow VAT to be absorbed into the substitute tax for revenues exceeding 85,000 euros.

The choice to finance most of the measures through new debt, exploiting a temporary EU derogation for military and energy spending, reflects the difficulty of finding alternative funding without increasing the overall tax burden. The text approved by the government must now undergo the parliamentary process, where further amendments and tensions among the majority forces may emerge.