New Italian government's budget to boost spending to fight energy crisis

Due to the ongoing energy crisis triggered by Russia's invasion in Ukraine, Prime Minister Giorgia Maleni and her comrades will not be able fulfill their extravagant electoral campaign promises including swinging tax cuts.

"We won't have the ability to do everything at once. "Previous attempts at doing that have led to disaster," Industry Minister Adolfo Urso told La Stampa newspaper on Sunday.

Meloni has already stated that approximately two-thirds of the extra spending power would go to helping households and businesses survive record-high electricity and gas bills. This is in addition to the €75 billion that was spent on 2022 to combat rising energy prices.

This cabinet lifted the 2023 deficit target from 3.4% predicted by Mario Draghi to 4.5%. Ministers insist that they will be fiscally prudent and avoid budget mistakes that discredited Liz Truss, Britain's former prime minster.

The far-right League party's campaign promises for a generous reform to the pension programme were delayed. While the budget will reduce the tax burden on labor, substantial income tax cuts have been ruled.

To help families cope with the eye-watering inflation that hit 12.6% in October under the EU harmonized index, the cabinet has considered eliminating sales tax on essentials like milk and bread.

Some of the spending promises will be paid for with additional borrowing. However, around 3 billion euros worth of new revenues are expected to come from windfall taxes on profits earned by energy companies that have been impacted by skyrocketing oil and gas prices.

Meloni will likely start rolling back a poverty relief programme for citizens' wages to help them save money.

Leftist parties argue that the measure is essential given the economic crisis, while coalition parties claim it allows the unemployed to avoid the job market.

"(Payments will be stopped for people aged 18 to 59 who are able to work. It won't happen immediately. There will be a transition period in 2023," Giovanbattista Fazalari, government undersecretary, told Corriere della Sera newspaper.

After the budget is approved by the cabinet, the parliament has until 31 December to make it law.

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