Italy will Approve a $14.5 Billion Package to Fight Inflation

Italy plans to approve a new aid package worth about 14.3 billion euros ($14.5 billion) to help protect businesses and households from rising energy and consumer prices.

The scheme, one of Prime Minister Mario Draghi’s last major moves ahead of next month’s national election, is on top of around 33 billion euros budgeted since January to reduce rising electricity, gas, and petrol prices.

According to a draft regulation obtained by Reuters, the government plans to continue existing measures aimed at reducing electricity and gas bills for low-income families in the fourth quarter of this year.

The project will finance initiatives such as subsidizing solar energy until nuclear power plants are phased out. These charges typically accounted for more than 20% of Italy’s electricity bills. The government will continue to pay 200 euros to low and middle-income Italians. The reduction of excise duty on fuel at the gas station, which expires on August 21, will continue until September 20.

Rome is also considering banning energy companies from making unilateral changes to electricity and gas supply contracts for households until October.

With tax revenues coming in better than forecast, the package’s funding will not raise the government’s deficit target, which Rome reaffirmed last week, of 5.6% of national output this year.

The Organization for Economic Co-operation and Development (OECD) estimates that in 2021, the average statistical worker in Italy will lose 46.5% of their gross salary in taxes and social security contributions.

To support the purchase opportunity of the elderly, the government in the fourth quarter of 2022 will proceed with the 2% revaluation of pensions planned for 2023, at a cost to the public treasury of approximately €2.4 billion.