Salary increase thanks to the cut in the tax wedge and IRPEF rates, but for now it is an effect that will only be had for one year (next)
In 2024 there will be several pay rises for private and public sector workers; for the latter, these increases – deriving from the fiscal effects of the measures being formalized – will be accompanied by the renewals of the CCNL, with particular reference to the safety and health sectors.
It is clear that when a measure produces a increase in paycheck and net income that each worker manages to achieve, the system benefits as a whole.
However, the element relating to provisional nature of the measure.
In fact, the increase in the amounts expected in the pay slips – at least as it has now been proposed – will only take effect in 2024.
Consequently, at the end of next year the Government will have to identify the same resources to finance the same measures for 2025 as well. So what? This obviously entails the (theoretical) possibility that the money will not be found and that, consequently, payrolls may fall again, due to a return to previous fiscal conditions, in the following year.
It is a very similar situation to the one we had in Italy for about ten years with the VAT safeguard clauses.
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Who benefits (and how much) and who doesn’t from the expected pay rises in 2024?
But who benefits and how much from the pay increases deriving from the various measures being talked about these days?
Let’s try to list the main data (source: re-elaboration of Corriere della Sera data):
up to 15,000 euros gross per year the paycheck will grow on average by around 60 euros per month; from 15,000 to 35,000 euros gross per year the paycheck will grow on average by around 100 euros per month; between 35,000 and 50,000 euros gross per year the paycheck will grow on average by 20 euros per month; above 50,000 euros gross there will be no benefit. This is because the Government has explained that it wants to introduce a compensation mechanism as a result of which the reduction of the second IRPEF bracket – which will go from 28% to 23% – will be reduced by a cut in the tax benefits deriving from deductions of the same amount.
Comparison between 2024 (provisional) payroll increases and VAT escape clauses
However, salaries will only increase temporarily, at least on paper. And the minds of many of us will certainly go back to the years in which every time we talked about the Budget Law, the bugaboo of the VAT increase came up.
In fact the comparison comes spontaneously and It doesn’t bode well.
The debut of VAT safeguard clauses in Italy dates back to 2011.
The Berlusconi IV Government, in order to see its financial maneuver approved by the European Union in a macroeconomic context characterized by a spread of +500, decided to guarantee Italy’s compliance with community constraints by promising that, in the event of failure to achieve the expected objectivesa plan to review the tax breaks would have been implemented and theVAT increase.
In essence, the VAT safeguard clauses represented a sort of pact with which Italy guaranteed compliance with community budget constraints and debt reduction objectives.
In 2021, after about 10 years, the Conte I Government canceled the clauses in question with the Relaunch Decree.
Today the same issue actually arises with the cutting of the tax wedge, started provisionally by the Draghi Government and extended, again provisionally, by the Meloni Government.
The measure in itself cannot fail to be welcomed, because it increases the net income of those who work. The question that arises is a prospective one: what will happen if the resources to refinance the provision are not found next year? Obviously the paychecks would go downwith negative effects on the purchasing power of families.
Several members of the parliamentary majorityhowever, they have now reiterated several times that the objective is to make this provision structural and there are all the conditions to do so as early as 2025. Let’s hope so.
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2023-10-23 06:24:35
#salary #increases #temporary
