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Household budget law: Italy plans to increase spending significantly by 2024 – despite high debt ratio

The Italian government led by Prime Minister Giorgia Meloni has passed its budget law for the upcoming year through parliament. Just in time for New Year’s Eve, the lower house – the larger of the two chambers – approved the budget plan on Friday with the votes of the right-wing majority.

This includes tax cuts for retirees and tax relief for low-income earners. Financial measures to support families and increased funding for the healthcare system are also planned.

Italy increases spending – despite high debt ratio

Tax cuts were a central election promise of the right-wing alliance led by Giorgia Meloni, which has been in power since October 2022. Expenditure is set to increase by 28 billion euros for 2024 – with nearly 16 billion financed through additional deficit. Italy is one of the countries with the highest debt ratio in the world.

One focus of the 2024 budget is the reduction of tax rates for income tax. The two lowest tax rates have been merged and reduced from 25 to 23 percent.

The budget also includes tax relief for retirees. Additionally, women with at least two children are to receive better tax treatment. Kindergarten will be free from the second child onwards.

Critics describe it as election gifts

Experts and trade unions had criticized the government’s measures as election gifts beforehand. They argue that instead of pursuing tax cuts and cost reductions based on election promises, there should be more investments in areas such as education and industry.

The Senate had already approved the law a week ago. According to the Italian constitution, both chambers of parliament must approve the budget plan in order for it to be traditionally passed by the end of the year.

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