Budget law agreement, Zan bill tussle

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The government of Prime Minister Mario Draghi presented the 2022 Budget Law, with measures worth a total of about €30 billion. The much-awaited legislation addresses an issue of great interest such as the structural cut of taxes and provides for other important interventions that constitute a break-up with Italy’s recent spending policies.

The head of the executive was able to mediate between the different souls of his ruling majority to avoid any ruptures and bring to fruition the budget text, which was hailed as a turning point that marks the transition of Italy’s spending from the logic of reliefs to that of development and growth. A crucial detail for a country that never before has had the priority of consolidating its economy rehaul after being weakened by the pandemic and by decades of failed reforms.

In terms of tax cuts, a special multi-year fund of 12 billion will be created (of which 8 to kick-off the reform), the modalities of which will be defined during the parliamentary discussion of the budget law. Palazzo Chigi would like to give priority to the reduction of the IRPEF personal income tax and on the IRAP regional tax on productive activities, although it will be the negotiations with Parliament and social parts to define the final choice.

On this point, it is easy to predict that while the center-right will ask for an intervention on productive activities, the center-left and trade unions will push for a change to the tax wedge. Regardless of the discussion’s outcome, what is relevant is the fact that with this move the government seems to want to leave behind the season of emergency interventions – with nonnegotiable fiscal packages dropped from above – to restore centrality to the political debate.

The other great feature of the package concerns the “normalization” of the economic legacy of the first Conte Cabinet. The reference is of course to the ‘quota 100’ pension system and to the citizenship income, or the two flagship measures of the Lega-M5S government that were much discussed in recent years – especially for their actual capability to reflect the logic that had inspired them.

The pension reform has been overcome without causing any rupture with Matteo Salvini’s party, while the citizenship income has been transformed from an indiscriminate subsidy to a tool for entering the labor market. With a more rigorous system of controls and a gradual decline in its disbursement for those who refuse the first job offer.

Despite the center-right pressure against the M5S measure and a mini-row within government allies that took place before the final Cabinet meeting, the 5-Star defense and above all the prime minister’s desire not to scuttle the measure proved decisive. According to Draghi, in fact, the citizenship income must be credited with having been an element of social stability in the hardest phase of the pandemic despite its well-known distortions.

Net of the above, the climate of essential harmony registered on the Budget law among ruling coalition allies – as proved by an unprecedented and liberating choral applause for the approval of the measure – contrasts with the violent political clash over the so-called Zan bill, or the homophobia legislation that was blocked by the Senate floor on Wednesday.

The incident certified the existence of an alternative majority to the center-left one that had backed the second government of Giuseppe Conte, a fact that according to some analysts even constitutes an anticipation of the election of the next head of State. At the same time, it has triggered a fierce debate on the direction in which Italy (not) intends to move in terms of the protection of civil rights, which involves relevant sections of public opinion.

On the political level, the vote has led to the implosion of the grand alliance envisaged by the PD secretary Enrico Letta. In the intentions of his proponent, this alliance should have federated the moderate forces, the center-left and the M5S to beat the center-right; in addition, it seemed to have received an encouraging baptism of fire with the triumph in the municipal elections earlier this month.

The Senate snipers intervention against the Zan bill, on the other hand, has called everything into question – unleashing an avalanche of cross-fire about who is really responsible for Wednesday’s defeat and casting a shadow on the prospects of the center-left in the race for the Quirinale. The relations between the PD and Italia Viva suffered the most, as had not happened even after the collapse of the second Conte government.

But even those between the PD and center-right Forza Italia are shaken, despite the fact that Berlusconi’s party was considered up to now to be the most responsible opponent. Doubts arise also about the actual ability of the M5S leadership to keep parliamentary votes under control. Since all votes on Sergio Mattarella’s successor will be secret, the center-left is afraid of suffering the victory of an unwelcome candidate.

In the meantime, the long-awaited G20 under the Italian presidency is about to kick off in Rome. It is a summit devoid of cogency, which will only count to the extent that it allows some of the world’s top leaders to meet bilaterally away from the spotlight. Born as an international forum centered on the placid world of the early Millennium, today the G20 is simply unable to affect the power games that mark the skin of the planet. Proof of this are the major defections (China, Russia, Japan and Mexico), which weigh almost as much as the participants.

Nonetheless, the meeting represents an important showcase for Prime Minister Draghi, who sees the possibility of consolidating his leadership in Europe now that Angela Merkel is close to leaving the German Chancellery and Emmanuel Macron has to deal with the imminence of the French presidential elections.