The Italian government is considering changes to tax deductions that would provide greater benefits to families with more dependent children, regardless of their income level. This proposal might involve removing or revising some existing tax deductions for individuals without children to increase those available for families with children.
According to a report in Il Foglio, Minister of Economy Giancarlo Giorgetti is working on this initiative projected to cost between five and six billion euros. The proposal includes implementing a family quotient for deductions, a concept aimed at providing more tax relief to families with children. Giorgetti has reportedly discussed this proposal with the Prime Minister.
Giorgetti is expected to explain to political opponents that the low birth rate is not just a social issue but an economic crisis. The proposal aims to address this crisis by offering lower taxes and increased deductions for families with children. If Italy does not take action to reverse the declining birth rate, the country could face long-term economic challenges.
Birthrate is a critical issue
The proposal reflects an ambitious and potentially transformative idea, aligning with recommendations in a recent report on competitiveness delivered by Mario Draghi to European Commission President Ursula von der Leyen. Draghi highlighted the declining birth rate as a critical issue, noting the EU could see a reduction of nearly two million workers per year by 2040.
Giorgetti’s proposal builds on an earlier attempt to exempt families with more than two children from certain taxes. The next Stability Law may centre around a concrete plan to overhaul tax deductions. Prime Minister Giorgia Meloni has expressed interest in rationalising tax breaks and bonuses as part of a broader review of tax expenditures.
This potential reform on tax deductions for families could fulfil a key promise from the 2022 electoral programme, aimed at supporting birth rates and addressing the country’s demographic challenges.
In April, President Mattarella said the Constitution obliged the political world to help people start a family. However, the right-wing government does not support surrogacy or the registering of both same-sex parents on a birth certificate.
