Deputy Prime Minister Luigi Di Maio and the ministers of the Five Stars look out from the balcony of Palazzo Chigi just before 23 pm to exult in front of a hundred Grillini parliamentarians and celebrate the budget maneuver that puts Minister Tria in the minority and foresees the soaring deficit to 2,4% for three years to initiate the start of the CBI, To flat tax and overcoming of the Fornero law on pensions. It is the main scene of last night's Council of Ministers which is accompanied by the ovations of the grillini who face the future with recklessness to the cry of "We are not afraid of the spread or the markets". But after yesterday's lunar day, the real showdown on the markets will start today, while the confrontation with Europe is already planned and will almost certainly lead to one infringement procedure against Italy.
"Agreement reached with the whole government in the deficit-GDP ratio for 2019: we are satisfied, it is the maneuver of change" declared the leader of the Five Star Di Maio and that of the Lega Salvini in a joint note.
The leader of the Ministry of Economy, Giovanni Tria, which was kept in constant contact with the Quirinale, tried to resist for three hours but then he had to give up to the overrun of public finances: “I'm staying for the spirit of country“. His resignation would entail a Government crisis.
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But here is what the Def update note provides, which represents the basis and framework of the actual budget maneuver and which the Government approved yesterday evening
CITIZENSHIP INCOME AND CITIZENSHIP PENSION
In the Def there is a first start of the Five Stars symbolic measure with an allocation of 10 billion both for the basic income and for the citizen's pension for 6,5 million citizens who are below the poverty line. It begins with the strengthening of employment centers and the progressive raising of minimum pensions to 780 euros. In any case, the actual basic income will start in 2019 and all Italian citizens who have been resident in our country for at least 10 years will be able to receive it. The check is conditional on active job seeking and is forfeited after three rejected job offers.
FLAT TAX AT 15% FOR VAT NUMBER AND REDUCTION OF IRPEF RATES
La flat fee promised by Salvini's League, it will start with VAT numbers, extending a measure already introduced by the Renzi government with the 2015 Budget Law, i.e. a fixed levy of 15%. In fact, the novelty is an enlargement of the flat-rate tax for VAT numbers with the raising of the maximum turnover threshold for admission (today it fluctuates between 25 and 50 euros depending on the activity; for professionals it is 30 euros).
But it's not over. With regard to the personal income tax, the current five rates will drop to three and then, from 2021, to two. In addition to the number, the level of the tax rates will also be gradually reduced: the target is 23% for incomes up to 75 euros and 33% for those exceeding this threshold. All by the end of the term.
PENSIONS
The Def also starts the overcoming of the Fornero law providing for the possibility of early retirement through the famous share 100 (sum of age and years of contributions) which will concern about 400 people, in the hope, very hypothetical but often denied by experience, that this will open the doors of employment to young people. Cost: eight billion euro.
As for the so-called "golden pensions", a cut from 90 thousand euros a year to checks for more than 4.500 euros net per month is on the way. Di Maio keeps repeating that it will be a recalculation with the contributory method, but that's not the case. It will rather be a dry cut that retroactively punishes those who retired before the age set (but only since 2012) by Fornero.
BANKS AND COMPENSATION
The resources for those "frauded by the banks" are increasing through the establishment of a 1,5 billion ad hoc fund fueled by the Dormant Account Fund, created in 2008. The sum is 15 times higher than the 100 million allocated with last year's Budget law (money which was never paid due to the technical difficulties caused by the change of government). The compensation will be assigned to savers overwhelmed by the bank failures with an arbitration by Consob.
TAX PEACE AND NEW SCRAPPING
It's called fiscal peace but it's de facto a pardon for defaulting taxpayers what the Council of Ministers approved to finance (in part) the maneuver. Basically, it will be possible to forgive unpaid tax bills and tax disputes - even pending in the second degree - up to a value of 100 thousand euros. The League would have liked to raise the ceiling tenfold, up to one million euros, but for the moment the position of the Movimento 5 Stelle has prevailed on this point.
In the draft of the National Reform Plan attached to the Def, it is specified that "at present, the residual book value of the loans that various institutions have entrusted is very high and overall equal to almost 800 billion euros, of which, however, only 50 billion are actually recoverable".
