Background information

The reduction in the fiscal wedge, a key intervention of the DL 4 May 2023 n. 48 (Labour Decree), aims to reduce the high tax burden on Italian workers. According to the OECD, Italy is among the top five countries with the highest tax burden. As a way to stimulate economic growth and improve employment conditions, the Italian government approved a surplus of over €3 billion at the end of April with deviation to DEF to fund this reduction.

Content of measure

This measure leads to an increased net salary for wages up to €35,000 from 1 July to 31 December 2023. The reduction will result in significant cuts from two to six points for incomes up to €35,000 and from three to seven points for incomes under €25,000. The enhancement of the fiscal wedge cut will increase the net salary by €96 per month for workers with incomes up to €25,000 and €99 per month for workers with income up to €35,000.

It is important to note that this measure will only apply for a six-month period, and if no changes are made during the conversion of the decree into law, the rate will return to its current values in December 2023. This measure was introduced as part of the Labour Decree approved symbolically on 1 May 2023, but there has already discussion about extending it into 2024, which would require at least another €12 billion.

Use of measure

No data available

Target groups

Workers	Businesses	Citizens
Applies to all workers	Does not apply to businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations Company / Companies	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Any other form of consultation, institutionalised (as stable working groups or committees) or informal	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Unknown

Involvement

We do not have the information about who participated in the designing of the measure.

Views and reactions

At an event organised by CGIL, CISL, and UIL in Bologna, Maurizio Landini, General Secretary of the CGIL (Italian General Confederation of Labour), addressed the tax wedge cut and other aspects of the Meloni government's Labour Decree. During a protest against the government's labour measures, Landini expressed to Sky that making the tax cut permanent would cost over €10 billion. He criticised the current measure, which only covers six months, as insufficient, especially considering the double-digit inflation.

Sources

• 08 May 2023: Landini (Cgil) on the cut in the tax wedge: "Commitment that the government has absolutely not made" (www.tag24.it)
• 11 May 2023: DL Lavoro: The cut in the tax wedge has been strengthened but structural intervention is needed (www.lavorosi.it)
• 23 May 2023: Cutting the tax wedge in the 2023 Labor Decree: from when and for whom does the paycheck change? (www.informazionefiscale.it)
• 16 January 2024: The main measures of the 2024 budget law (www.mef.gov.it)