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League victory in EU vote strains Italian government

“The fuse that will lead to the government's collapse has been lit”, said Italian political experts on Monday following the League's EU election triumph.

Published: 27 May 2019 12:52 CEST
League victory in EU vote strains Italian government
Italian Deputy Prime Minister and Interior Minister Matteo Salvini arrives to cast his ballot at a polling station in Milan on May 26, 2019, as he votes in European parliamentary elections. Photo: AFP

The success of the eurosceptic, anti-migrant League party at the European elections has raised questions in Italy over the current populist coalition government's future.

The League won more than 34 percent of the Italian vote, compared to just six percent in the 2014 EU elections and 17 percent in the Italian general election last year.

The results confirm the reversal of fortunes of the League and its coalition partner, the anti-establishment Five Star Movement (M5S), which took 32.5 percent at the general election but took home just 17 percent on Sunday.

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“We can expect a week of frenetic negotiations to see how everyone will reposition themselves,” said Giovanni Orsina, politics professor at Rome's LUISS University.

The League victory and M5S collapse in popularity “is explosive in terms of the consequences for government stability,” political analyst Stefano Folli wrote in the Repubblica daily.

“We're not talking tomorrow, or the day after, but the fuse which will lead to the government's collapse has been lit,” he said.

READ ALSO: How EU elections could lead yet another Italian government to collapse

The League snapped up votes from both the M5S and the opposition, with a hardline stance on migration and a savvy multimedia team bombarding Italians with selfies of leader Matteo Salvini.

The party did particularly well in centres seen as migration “hot spots”, including a town held up as a model of integration.

“A miracle”

Salvini's victory had been widely expected, despite the M5S taking advantage of embarrassing corruption scandals involving the far-right party.

The interior minister sparked an outcry at a rally in the run-up to the vote by holding aloft a rosary seen by many as a gratuitous prop, and calling for the Virgin Mary to carry him to victory.

“Salvini was convinced he could do it. The (corruption) investigations made the League lose five to six points, but then he pulled out his rosary. And perhaps he really did get a miracle,” Marco Valbruzzi from the Istituto Cattaneo research institute said.

Inside a polling station in Milan before the 2019 EU elections. Photo: Miguel Medina/AFP

M5S head Luigi Di Maio suggested the League had got one over on it because of political attacks which initially went unchallenged.

Salvini – who celebrated by tweeting a photo of himself grinning and holding a sign saying “top party in Italy” – is now likely to try to force the M5S's hand on every plan it has contested since the coalition formed in June 2018.

“I ask for an acceleration on the government programme,” the 46-year-old said, brandishing Roman Catholic rosary beads.

The main questions at stake are a high-speed rail line between the cities of Turin and Lyon in France, and a flat tax proposal.

“Too silent”

“Perhaps we were too silent, too pure at the beginning, and if that was our mistake I take responsibility,” he said Monday.

The results place Prime Minister Giuseppe Conte in an increasingly difficult position. The leader agreed upon by Salvini and Di Maio is purportedly independent but was a M5S pick.

Analysts say Salvini may be tempted to break up the coalition and join forces with others on the right.
“I'd say the possibility of autumn elections is over 50 percent, unless there's a very strong alignment of the M5S with the Salvini leadership, which would create enormous tensions within the Movement,” Orsina said.

Italy's small far-right Brothers of Italy (FdI) party took home 6.4 percent of the vote, while billionaire Silvio Berlusconi's centre-right Forza Italia party, a historic ally of the League, pocketed 8.8 percent.

“Salvini may pull the plug if he feels confident enough in getting an outright majority by siding with Brothers of Italy and part of Forza Italia (without Berlusconi),” said Lorenzo Codogno, former chief economist at the Italian Treasury Department.

The centre-left Democratic Party (PD), which won just 18 percent at the general election, took 22.7 percent of the vote, clawing back some votes from M5S.

The Green party, which recorded significant gains in many other European countries, took just 2.29 percent.

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ECONOMY

Who will pay less income tax under Italy’s planned reforms?

Italy is planning an overhaul of the tax system meaning new income tax rates for many - but who will benefit the most, and least?

Published: 17 March 2023 13:41 CET
Who will pay less income tax under Italy's planned reforms?

Italy’s government on Thursday submitted the text of a long-awaited tax reform bill which ministers say will be the first step in a sweeping overhaul of the system planned by 2027

As previously reported by The Local, the bill will introduce a raft of major tax changes aimed at gradually reducing Italy’s notoriously high tax burden and making investment in Italy more appealing. 

The plan includes a substantial change to Italy’s main income tax, Irpef (Imposta sui Redditi delle Persone Fisiche), with the number of  tax brackets dropping from four to three.

READ ALSO: Flat tax for all? Italy announces plan to overhaul tax system

This change is expected to mean a new tax rate for many workers in Italy starting from next year. But who’s going to benefit the most from the changes? 

Here’s what we know at this point. 

Irpef, which applies to all employees, many self-employed workers (regular partita Iva holders, but not those on the flat tax rate) and pensioners, currently counts four brackets, which are arranged as below:

  Income (annual) Irpef rate
First bracket Up to 15,000 euros 23 percent
Second bracket Between 15,000 and 28,000 euros 25 percent
Third bracket Between 28,000 and 15,000 euros 35 percent
Fourth bracket Over 50,000 euros 43 percent
     

The coming tax reform will reduce the number of tax brackets down to three, with the second and third bands being merged into a single one.

The tax rate for the lowest earners is expected to remain unchanged at 23 percent (for those earning 15,000 euros a year or less).

The tax rate should also stay the same for the highest earners taking home 50,000 euros a year or more, at 43 percent.

But middle earners who are currently in the second or third bracket may end up paying more or less tax – and it’s still unclear exactly what will happen. 

READ ALSO: The tax changes in Italy to know about in 2023

While Thursday’s announcement confirmed the number of tax bands will drop to three, the newly published bill didn’t specify what tax rate the new band would carry nor confirm how rates in other bands would be readjusted. 

However, Meloni’s cabinet is reportedly considering two options. 

First scenario

Under the first, and currently more likely, option, the new middle bracket will mean all taxpayers earning between 28,000 and 50,000 euros a year will pay a 33-percent rate.

Rates for the first and last brackets would remain the same.

This would mean all those who are currently in the second (income between 15,000 and 28,000) and third bands (28,000 to 50,000) would see their tax rate drop by two percent next year and subsequently benefit from sizable cuts to their Irpef payments. 

  Income (annual) Irpef rate
First bracket Up to 28,000 euros 23 percent
Second bracket Between 28,000 and 50,000 euros 33 percent
Third bracket Over 50,000 euros 43 percent
     

Second scenario

Meloni’s government is also considering a second scenario, with a 27-percent rate for a larger middle band – an option that would be much more costly to the state, and so seems less likely.

This would mean people currently in the second bracket (15,000 to 28,000) will see their tax rate increase by two percent, while those in the third bracket (28,000 to 50,000) would benefit from a whopping eight-percent cut. 

Rates for the first and last brackets would again remain the same.

  Income (annual) Irpef rate
First bracket Up to 15,000 euros 23 percent
Second bracket Between 15,000 and 50,000 euros 27 percent
Third bracket Over 50,000 euros 43 percent
     

Which path will the government go down?

While it was hoped that the bill’s text would clarify what rate the new band would carry, there are currently no details as to which option the government intends to go with.

That said, the first option seems to be the more likely one at this point in time, not least because implementing it would reportedly cost state coffers around 6 billion euros, whereas the second option would present the treasury with a 10 billion-euro bill.

Further information over which route the government will ultimately go down should emerge in the coming weeks as the bill goes through parliament. 

And even the possibility that Meloni’s executive might end up adopting an Irpef system other than the two described above cannot be ruled out at this time.

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