The May 1st decree of the Meloni government will bring up to 100 euros more in the pockets of workers. But only from July to December. Then it will have to be refinanced. The cut in the tax and contribution wedge for five months (and no longer eight as in the initial hypothesis) will increase by another four points. For the pay periods from 1 July 2023 to 30 November 2023, the extent of the exemption will rise from the current two points to six points for income up to €35,000 and from the current three to seven points for income up to €25,000. The extra hundred euros in the paycheck are the conjunction of two tax cuts on work. So far gross incomes of up to 25 thousand euros have received an average benefit of 41.25 euros per month from the interventions of the Draghi government and the Meloni executive.
The paycheck
With the discount of another four percentage points on the payroll, 54.87 euros would therefore be added, for a total of 96.03 euros per month. However, the cut will be valid for five months. The measure is provided for in the latest draft of the labor decree in article 34. The allocation is 4.1 billion euros. For the lowest incomes, the tax relief goes from 3 to 7%. For salaries up to 35,000 euros, however, the benefit rises to 6%. Employees will have an extra 98 euros in their paycheck. The current benefit is 32 euros per month. In December we will return to cutting the wedge of the Draghi government while the workers will benefit from the thirteenth month. In 2024, replicating the measure will cost between 12 and 13 billion. Alternatively we will revert to the old emoluments. In the meantime, the government has promised to reform Irpef. Tax cuts in workers’ paychecks thus remain the preferred tool of fiscal policy from government to government.
The other cuts
In 2022 the budget law had introduced the exemption of 0.8 percentage points for those who earned 35 thousand euros a year (i.e. had a gross salary on a monthly basis of 2,692 euros. Draghi’s Aiuti Bis decree then allocated another 1.7 billion to the relief in the second half of the year. Increasing the cut by another two percentage points. The one currently in force was introduced with the 2023 budget law. The relief is currently set at the level of 2 percentage points for incomes below the limit monthly salary of 2,692 euros (about 35,000 per year). While it is 3 points for those below the monthly limit of 1,923 euros (about 25,000 per year). The council of ministers convened for today, May 1st, can therefore close a game of relief until 2024. When the reform of brackets and rates could finally see the launch, otherwise the government will find itself having to refinance the cut.
Fringe Benefits: three thousand euros for workers with children
Then there is another novelty regarding the category. For workers with children, the company’s fringe benefits could reach 3,000 euros. In fact, the limit of the non-taxable fringe benefit rises to 3 thousand euros. The fringe benefits are those contributions assigned to employees and disbursed in forms other than money which, however, appear in the pay slips. The novelty comes on the proposal of Economy Minister Giancarlo Giorgetti and is intended only for employees with dependent children.
The article “Fiscal measures for corporate welfare” contained in a draft of the Labor decree establishes that “limited to the 2023 tax period, by way of derogation from the provisions” of the Consolidated Law on Income Taxes “they do not contribute to forming income the value of the goods sold and services provided to employees with dependent children, as well as the sums paid or reimbursed to them by the employers for the payment of domestic utilities for the integrated water service, electricity and natural gas within the limit total of 3,000 euros”.
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