The budget law is there, but the coverage is not. Numbers

“Prudent, responsible and sustainable”. This is how the budget maneuver was presented by Economy Minister Giancarlo Giorgetti, emphasizing the decreasing trend in the deficit and debt/GDP. Unfortunately, however, today, after seven days from the Council of Ministers which approved it and six from the press conference where it was presented to reporters, a considerable portion of the budget law is still unknown.

What is missing is a good part of the so-called coverage, ie the measures with which the government intends to finance the tax cuts and spending increases on which it has instead been diligent in communicating. During the press conference, almost all 63 minutes of presentation by the Prime Minister and ministers were dedicated to lower revenues and higher expenditures, while little or nothing is known about who will pay for these measures. Or rather, little or nothing is known other than the additional deficit. The only fixed point, already written in black and white in the Update Note to the Economic and Financial Document, are in fact the 21 billion additional deficit. From 3.4 per cent of GDP forecast to 4.5 per cent.

Fine, but everything else? We know that the budget law intervenes on around 35 billion in tax cuts and higher spending. To finance them, therefore, there is a shortage of around 14 billion euros, i.e. as much as 40 percent of the interventions.

Let’s start with the official documents. We should find the answer to our questions in the Draft Budgetary Document sent to the European Commission. But reading it leaves one disappointed. Among the covers, the only known items are the reduction in spending for the Superbonus, which goes from 110 to 90 percent for single-family homes, and the cut in the citizen’s income. The two measures add up to about 1 billion euros in savings. Out of the remaining 13 necessary we find two generic points: “Other income” for over 6 billion euros and “Other (minor) expenses” about 7 billion. Nothing else is communicated on who will actually pay these 13 billion.

However, we can further narrow the field, remaining in the field of hypotheses, based on the statements of government members and on the press release of the Ministry of Economy. Deputy Minister Maurizio Leo stated in an interview that around 3 billion euros should come from the new taxes on energy extra profits: a number we can half rely on given the partial ineffectiveness of the extraordinary contribution introduced by the Draghi government, but for now let’s stick to the executive numbers. The second item should come – surprise surprise – from pensions, or rather from the lack of total revaluation to the inflation of checks over 2,100 euros per month. From here, according to the numbers of the Dpb and journalistic advances, around 2 billion euros should arrive. Let’s go further: the Ministry of the Economy has communicated that it expects “about one billion” from the “revaluation of company assets and equity investments”. That is to say from the modification of the rule introduced in 2020 to facilitate companies that wish to revalue their assets by aligning them with market values: in doing so, depreciation is caused, which reduces profits and therefore the taxes to be paid (reduced with the 2020 maneuver) . It seems that the budget law will make this mechanism less convenient, resulting in higher revenues for the state and higher taxes for businesses. Fourth item – also this note because inserted in Nadef – will be the spending review of the ministries, for about 800 million. Also on spending savings from basic income – 734 million euros – the conditional must be used, since the Ministry of the Economy writes in its press release that “they will be allocated to a special fund which will finance the overall reform to support poverty and inclusion”. This obviously means that this money will not be able to finance the cut in the tax wedge or the expansion of the flat-rate regime for VAT numbers. And finally the increase in excise duties on cigarettesfor 138 million euros.

A calculator is enough to notice that six billion euros are still missing from the account, on which no information is available. Yet the government will soon have to decide who will pay them, if it wants to have the maneuver hauled by the Accounting Department. The options are various: a cut in tax deductions for the highest incomes (there was talk of it, then the hypothesis seems to have waned) or the new taxation on cryptoassets (from which, however, the hopes of revenue are limited). Another hypothesis was the increased collection from the umpteenth scrapping of tax bills, which has always guaranteed a few billion in recent years. However, in the budget planning document, the government estimated that the new amnesty should actually cause a worsening of the public finances and not an increase in revenue.

Delays in the publication of the budget law are increasingly frequent and were also a bad habit of Giorgia Meloni’s predecessors. But let’s not fool ourselves: in the days that preceded the Council of Ministers which approved the maneuver, the newspapers read of a premier who was annoyed with her government allies over excessive demands and determined to include only measures with the necessary coverage in the budget. We register that a week after the definitive covers are still not there and we are waiting to read them to judge them.