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(Bloomberg) — Italy’s government is targeting €4 billion ($4.4 billion) from companies by adjusting some tax thresholds and eliminating certain tax deductions, according to people familiar with its budget plans.
Finance Minister Giancarlo Giorgetti’s team is working on ways to raise money to help fill a €9 billion shortfall in a last-minute tweak to the country’s financial plan, said the people, who declined to be identified because discussions on the matter are confidential.
The €4 billion figure is included in draft proposals under discussion in the Finance Ministry and nothing has been decided. The final call on all matters regarding the €25 billion budget will be taken when Prime Minister Giorgia Meloni’s cabinet gathers on Tuesday evening in Rome, in time to meet the deadline that day of submitting annual fiscal plans to Brussels.
The Finance Ministry rejected any reports on what the budget may contain, saying that the details are confidential.
Meloni has stressed publicly that her government’s main aim is to reduce taxation. The 2025 budget includes a hefty tax break on wages — fulfilling a key campaign pledge — and she’s also asked officials to look at increasing tax deductions for some companies.
That may appease Forza Italy, one of the junior coalition partners, who is likely to be opposed to any hikes in company taxation.
The down-to-the-wire nature of the budget timetable reflects just how tight the predicament is for Meloni’s coalition as it tries to stick with European Union commitments to fix its public finances while still delivering on generous pledges to voters.
Italy has succeeded so far in impressing ratings analysts with its ambition to bring the deficit below 3% in 2026. A Fitch Ratings analyst told Bloomberg last week that “on paper, it looks like they can deliver,” with the caveat that the country’s track record on doing so isn’t great.
Investors have bought into the story too, in contrast to the recent concern they have shown toward France. The spread between Italy’s 10-year bonds and those of Germany — a key measure of risk in the region — touched 127 basis points on Monday, the lowest since July.
For weeks, Meloni’s government has struggled to work out how to find the money to meet its promise to stick to a wage tax cut worth €10 billion.
Last week, Giorgetti confirmed the government’s plan to do that, along with reducing income tax brackets and channeling money toward families and health.
Intense scrutiny on Italy’s fiscal plans is set to continue in the coming weeks, with Brussels officials set to give their assessment, and ratings companies poised to do so too. On Friday, both Fitch and S&P Global Ratings are scheduled to release potential updates on the country.
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