At the end of the month, the government's machete will strike the forest of personal income tax deductions, but those on health care costs should be saved. This is the orientation of the Executive a few days before the deadline set in the latest Stability law, which prescribes the reduction of tax rebates by 31 January to save at least 500 million euros a year.
There are two possible solutions: linear cut of all personal income tax deductions (which would drop from 19% to 18% on expenses already incurred in 2013) or selective cut, more difficult to achieve but also much less controversial.
In this context, the health chapter is decisive. The total package of personal income tax deductions at 19% is worth 5,4 billion euros every year, half of which (2,7 billion) is absorbed precisely by discounts on health care costs and assistance for the disabled. The Government aims to save them, but it is clear that excluding this portion of the deductions, achieving the savings target would be even more complex.
Immediately after health care, the most significant items concern expenses for life and accident insurance, for interest on first home mortgages and for children's university. Cutting Irpef deductions from 19 to 18% on all these items may not be enough to keep 500 million a year in the state coffers, so the Government is thinking of completely canceling some of these tax discounts for those in the income brackets higher. The scissors, however, would not concern only the rich, because it would be necessary to start at least from the middle class.
In the end, to find the balance, the technicians could decide to subordinate some health expenses, the less essential, to income. But even this would not be an easy way.
