Italy's Finance Minister Giancarlo Giorgetti told parliament that the government's upcoming budget will combine a flat‑tax incentive for young workers with a pension eligibility age of 64, while emphasizing the need to keep public accounts under control.
Fiscal framework and the flat tax
The proposed flat tax is aimed at relieving the tax burden on employees under a certain age, a move the minister described as "tax relief on pay rises for young people." According to Il Sole 24 ORE, Giorgetti said the flat‑tax threshold could be raised in the budget, signalling flexibility to adjust the benefit if fiscal conditions allow. The policy is presented as a tool to stimulate employment among Italy's younger population, which has struggled with high unemployment and precarious contracts.
Pension reform and age threshold
Simultaneously, the budget would raise the age at which workers can claim a full pension to 64 years. Giorgetti stressed that the change is "sensible" but warned that it must be balanced against fiscal sustainability and fairness, echoing the government’s broader goal of containing debt while preserving social protection. Italy, whose public debt exceeds 150% of GDP, faces demographic pressure from an aging population, making any adjustment to retirement rules politically sensitive.
"The flat tax threshold could be raised in the budget. On pensions, we must ensure a balance between fiscal sustainability and fairness," Giorgetti told legislators, as reported by Il Sole 24 ORE.
Political reactions and coalition dynamics
The proposal has already triggered debate within the centre‑right coalition that backs Prime Minister Giorgia Meloni. The Lega party criticized Forza Italia's refusal to accept a contribution from the banking sector, calling it "incomprehensible," according to Il Sole 24 ORE. The comment underscores tensions over how to fund the fiscal measures without compromising the government's broader budgetary goals.
While the flat‑tax initiative is promoted as a growth‑oriented reform, opponents warn that reducing tax receipts could strain the state’s finances unless accompanied by higher growth or other revenue sources. The pension age increase, meanwhile, is intended to align retirement benefits with longer life expectancy, but critics argue it may erode support for older workers.
The budget, known in Italian as the "Manovra," will be debated in both houses of parliament in the coming weeks. If approved, the flat‑tax relief and the new pension age would become law for the 2025 fiscal year, marking a significant shift in Italy's tax and social‑security architecture amid ongoing efforts to restore fiscal credibility after years of high public debt.
