EU Tax and Reform Plan for Italy: Will Meloni Comply?

EU Recommendations to Italy: A Closer Look

The European Union has recently provided Italy with new tax suggestions and reforms in order to finance a reduction in the tax burden, ultimately leading to an increase in workers’ salaries and a lightening of the load on businesses.
At the same time, Brussels has criticized the fiscal measures introduced by the Meloni government in the past year.
Despite this, the current government has not responded to these critiques yet.

The core of the recommendations made by the European Commission to Italy revolves around the need for the country to decrease labor taxes.
According to the EU, the fiscal revenues in Italy, relative to GDP, are relatively high compared to other member states.
The Commission highlighted that the current temporary measures legislated until 2024, which aimed at cutting labor taxes, have limited effectiveness.
Moreover, the extension of flat-rate tax schemes to self-employed workers has been deemed detrimental to horizontal equity and tax system efficiency, reducing redistribution and favoring specific categories of taxpayers while hindering business growth.

In response to these observations, the government is urged to make the cut in labor taxes structural, simultaneously increasing its depth.
However, without resorting to deficit spending, certain revenues are needed to finance this measure, estimated at around 10 to 15 billion euros per year.
The EU has suggested revising property taxation through cadastral reform as the primary revenue source.
Additionally, higher taxes on energy sources and polluting vehicles are proposed, with the Commission also renewing its call for the ban on beach concessions.

These recommendations are crucial as Italy will likely face a period of oversight by the EU, with the possibility of being overseen by the Commission for the next seven years.
Failure to comply with the prescribed corrective measures could result in sanctions.
It remains to be seen how the Italian government, particularly under Giorgia Meloni, will navigate these demands and strike a balance between fiscal sustainability and economic growth, as outlined by the European Union.