Tax increases on baby products, feminine hygiene products and tobacco products are just some of the measures set out in the draft 2024 budget bill. The proposed budget, worth €24 billion, was approved by Meloni’s government on 16th October.
Details of the 2024 budget bill became available only today, despite being approved by the government on 16th October. Previously, Meloni had said setting the 2024 budget was a ‘challenge’.
The PM also said she placed a strong emphasis on supporting large families, in line with her professed Christian values, while also addressing Italy’s demographic challenges related to its aging population.
Her proposed budget includes provisions to waive social security contributions for mothers with two or more children, along with a commitment to providing free nursery care starting with the second child.
Meloni expressed, “A woman who gives birth to at least two children has already made a significant societal contribution. This initiative counters the misconception that promoting childbirth discourages women from pursuing careers. These objectives can coexist harmoniously.” However, how increasing VAT on powdered milk, baby food and other baby products from 5% to 10% fits with this is yet to be explained.
The draft bill will begin its journey through parliament before the end of this week.
In Italy the standard VAT rate is 22%, with reduced rates applied to certain specific goods and services.
However, the introduction of the so-called sugar and plastic taxes – levies respectively on sugary non-alcoholic drinks and on single-use plastic items – has been postponed again for a further six months. They were initially introduced in the 2020 budget but never actually applied. Under the terms of the 2024 budget bill, the two new taxes should now take effect on July 1, 2024.
Tax on tobacco products
The proposal also ups both the specific tax component and the minimum tax burden on cigarettes, leading to an increase of between 10- and 12-euro cents per packet as of next year.
In addition, the budget confirms the planned increase in tax on heated tobacco products in 2024 and 2025 and raises it by a further point in 2026. Likewise, it increases the cost of cut tobacco by around 30 euro cents per packet. Electronic cigarettes are also set to increase in cost by 1% per year starting from 2025.
Tourist overnight stay tax
In other sections of the budget bill, the government has provided for an increase of up to 2 euros per night in the existing local tax on overnight stays by tourists during the 2025 Jubilee Year.
The additional proceeds can be used to fund activities related to the Holy Year celebrations, which are expected to bring millions of pilgrims and tourists to Italy, especially Rome.
Introduced in Italy at the start of the last decade, the tourist tax differs from city to city and according to accommodation type. In Rome, it currently ranges from a minimum of 3 euro per night to a maximum of 10 euro per night for a maximum of 10 consecutive days.
Migrant reception funds increased
In addition, the government has allocated 200 million euros to migrant reception in 2024 and 300 million euros in 2025.
The funding, which comes on top of additional resources allocated for migrant reception in a recent government decree, will also be used to support local authorities in their reception efforts. This includes working in favour of minors arriving in Italy without a parent or legally responsible adult.
So far this year, Italy has seen an 81% increase in the arrival by sea of migrants and refugees compared to the same period in 2022.
The rise in numbers has put the national reception system under severe pressure. The cities responsible for second-level reception projects, focusing on integration and inclusion and for special reception facilities for unaccompanied minors, are coming under particular strain.
Reduction in local spending
The government is also asking local and regional authorities to contribute to its planned two billion euro spending review by cutting a total of 600 million euro per year.
Under the draft proposal, regions are expected to reduce their spending by 350 million euros per year, excluding on health care and social rights, provinces by 50 million euro and municipalities by 200 million euro.
