Ensure a “prudent” fiscal policy and limit the growth of net primary expenditure to a ceiling of 1.3% in 2024. Cut taxes, especially on labour, without affecting fiscal progressivity. Ensure efficient governance to implement the recovery and resilience plan and reduce dependence on fossil fuels as much as possible.
These are the recommendations that the European Commission has sent to Italy, the cornerstone of EU coordination and surveillance policies. In the document, the executive reiterates “a growing risk of delays” in managing the plan, while the Commission has decided to avoid excessive deficit procedures in 2023. Economy Commissioner Paolo Gentiloni said that Brussels “plans to do so” in 2024 : «It is a message for the Member States: on the basis of the 2022 data, there would be 14» the states outside the parameters.
The three “blocks” of recommendations
The recommendations issued by the EU executive do not differ too much from those already formulated for 2022, when Brussels had asked Rome for a “prudent” fiscal policy and a curb on current spending. The 2023 document uses for the first time the indicator of the so-called net primary expenditure, calculated net of one-off revenues, interest or unemployment expenses.
Brussels insists above all on three fronts: the fiscal one, with the ceiling on the growth of current expenditure, the “transfer” of savings from energy subsidies to the reduction of the deficit and a reform that preserves progressivity; the implementation of the national recovery and resilience plan, to be ensured with accurate governance; an acceleration on renewables and the reduction of dependence on fossil fuels, favoring a green transition that seems to be lacking in Italy.
In particular, on the fiscal side, the EU Commission is asking Italy to “further reduce taxes on labor and make the tax system more efficient by duly adopting and implementing the enabling law on tax reform, while preserving the progressivity of the tax system”. Italy, he continues, will have to “improve the fairness” of the tax system, “in particular by rationalizing and reducing tax breaks, including VAT and subsidies harmful to the environment”, reducing “the complexity of the tax code”.