Renzi: we will cut the tax wedge by 10 billion, not 10%

The reduction in the tax wedge that the government will initiate in the next few months will be 10 billion, not 10 percent. In practice, just over a third of what initially the Prime Minister, Matteo Renzi, had implied with the words spoken in the Senate. He explained it to the Chamber, before the vote on trust in the new government.

The short journey between Palazzo Madama and Montecitorio was enough, the 26 hours elapsed between the declarations in the Senate and those in the Chamber were enough, and the "cut" of the tax wedge was drastically reduced. It will not be 10%, as everyone had understood after the words spoken in the Senate, but 10 billion overall, understood as lower revenue for the state. Which means just over a third of what it seemed at Palazzo Madama.

With the words "double-digit reduction of the tax wedge" - explained the Prime Minister, Matteo Renzi, in the Chamber - I meant the reduction in billions, not in percentage. And faced with the buzz of derision that rose from the hemicycle, he added "if I reduce the tax burden by 10 billion, I don't think smiles will come".

Therefore, the only element that seemed to be quantified among the economic policy initiatives announced in the 70-minute speech given before the Senate is heavily downsized.

That something was not right, in the intentions of reducing the tax wedge, had already appeared a few hours after the words spoken by Renzi, when the economic manager of the Democratic Party, Filippo Taddei, during a radio broadcast, explained that the Government would allocate between 8 and 10 billion to be able to increase the net paycheck of a worker with 50 thousand euros a year of gross salary by 30 euros a month, through the reduction of the tax wedge.

Fifty euros a month corresponds to about 700 a year, which represents about 3-4% of the tax wedge of a worker with that gross salary. Taddei's figures, therefore, did not square with what had seemed to be the intervention announced by Renzi. On the other hand, it had already been calculated that cutting the tax wedge by 10% was equivalent to reducing tax or social security revenues by almost 30 billion euros.

Renzi explained the misunderstanding to the Chamber. The innovative style of the Prime Minister, who illustrated the program of the newly installed Government "off the cuff" and in very general terms to Parliament, contributed to generating confusion between the words spoken and the real underlying intentions. We will have to get used to this new communication style.