ROME, Oct 19 Reuters - Italy will put aside at least 8 billion euros for tax cuts in the 2022 budget and to spend another 1 billion to reduce household energy bills, two political sources said.
To help support Italy's chronically weak economic growth, the government wants to reduce the so-called tax wedge, the difference between the salary an employee pays and what a worker takes home, which is particularly high in Italy.
This would be structured so that employees, rather than firms, reap most of the benefit, the sources said.
The Organization for Economic Cooperation and Development OECD estimates that the average single worker in Italy lost 46% of his gross salary in taxes and social contributions, the fifth-highest ratio out of a group of 37 advanced nations in 2020.
On Tuesday, Mario Draghi's government, which took office in February, is expected to unveil its first draft budget that will outlining almost 23 billion euros of expansion measures.
These are aimed at boosting growth next year, from 4.2% to 4.7% under an unchanged policy scenario, the Treasury said last month.
The budget is likely to earmark 1 billion euros to temper increases in gas and electricity prices for consumers in the face of rising global energy costs, one source said.
This comes on top of more than 4 billion euros already budged to keep energy bills down in the second half of this year.
Pensions will also be a key item in the budget, with Draghi's fractious ruling coalition split on how to replace an expensive early retirement scheme due to expire this year.
So called quota 100 allows people to retire if they have made 38 years of contributions and are at least 62 years old.
The rightist League party demands that Draghi do not reinstate the previous unpopular system whereby retirement was generally allowed at the age of 67, a regime put in place in 2011 at the height of the sovereign debt crisis.
Among options being considered are early retirement for workers in tough jobs, and a two-year temporary regime of quota 102 offering a pension to those who have paid in 38 years of contributions when they have 6 years of tax advantages.