Lower paycheck in 2023, 4.5 billion are needed to save wages

In 2022, a lot has been done – and spent – for increase the salary of Italians. First there was tax reform, with the provisional introduction of a contribution relief of 0.8% useful to compensate for the losses due to the farewell to the supplementary treatment of 100 euros, then – given the reduction in the purchasing power of wages due to inflation – the government introduced a one-off bonus of 200 euros paid out in July paychecks. And that’s not all, because with the Aid bis decree the aforementioned contribution relief was brought to 2%thus further cutting the tax wedge.

But it is not enough and the parties know it, so much so that in this electoral campaign we continue to talk insistently about tax wedge cut and of increase in wages. However, it will be necessary to deal with resources, given that the Draghi government leaves an important legacy to the next executive: in fact, just to confirm the 2% contribution relief, it will be necessary to identify 4.5 billion euros.

Cutting the tax wedge: starting again from the contribution relief

If the next government really intends to reduce taxes on labor, it will not be able to avoid confirm the contribution relief introduced by the Draghi government. In fact, we remind you that both the 0.8% relief provided for by the 2022 Budget law and the additional 1.2% of the Aid bis decree are in force only for the current year.

If something doesn’t change, then, the paychecks will be lower starting January 1, 2023. A real joke for those workers with income of less than 35 thousand euros, which have already been penalized by the 2022 tax reform given the abolition of the supplementary treatment (former Renzi bonus) for those with an income exceeding 15 thousand euros. These, in fact, are likely to earn even less compared to when the old deductions and personal income tax rates were applied.

The fact that the time frame for the 2023 Budget Law is tight certainly does not help, as the new government will also have to find the resources for other measures, such as the revaluation of pensions or the cutting energy costs.

The first thing to do, therefore, should be to confirm the contribution relief of 2.0%, keeping the employee-side contribution rate at the 7.19%. A measure that alone would cost 4.5 billion euros a year, not a few considering the current state of finances.

However, how can we think of a new cut in the tax wedge if we do not first confirm what has already been done? Canceling the contribution relief would mean starting from scratch, with lower paychecks that also pay the consequences of the inflation recorded in recent months.

What happens if the contribution relief is not confirmed

Today, on pay slips with a gross contributory taxable amount of € 2,692, one applies contribution relief of 2%which is in force until December 2022. Then, as seen above, it will be necessary to identify 4.5 billion euros if it is to be confirmed for at least another 12 months (plus the thirteenth).

If this is not the case, the contribution rate on the employee side, which has now fallen to 7.19%, would return to being equal to 9.19%. For example, for a salary of 2,000 euros there would be a net reduction of about 40 euros per month, just over 520 euros a year, even considering the thirteenth. For a gross salary of 2,500 euros, on the other hand, the loss on the paycheck would be 50 euros per month, 650 euros per month.

Without forgetting that in the meantime inflation increases and salaries remain stuck, which entails one substantial loss of purchasing power wages.

Already the 2% relief seems barely enough to limit the consequences of inflation, let alone if this is also waived. In short, what the next government will have to face will not be a simple challenge, especially if, in addition to confirming the aforementioned measure, it is understood further cut the tax wedgea goal that could require at least 10 billion euros for 2023 alone.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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