Italy’s new right-wing government will commit about 30 billion euros in new spending in next year’s budget, mainly focused on reducing the impact of high energy prices, while shelving some of its most generous campaign promises, Reuters reported.

The ongoing energy crisis, sparked by Russia’s invasion of Ukraine, means Prime Minister Georgia Maloney and her allies will be unable to deliver on their more extravagant campaign promises, including steep tax cuts.

“We will not be able to do everything at once. Previous attempts to do so have ended in disaster,” Industry Minister Adolfo Urso told La Stampa newspaper on Sunday.

Maloney has already said around two-thirds of the extra spending will be used to help businesses and households weather record gas and electricity bills.

They are on top of another roughly €75 billion set aside in 2022 to tackle rising energy prices.

This month, the cabinet raised the deficit target for 2023 to 4.5 percent of gross domestic product, from a forecast of 3.4 percent by Mario Draghi’s previous government.

But ministers say they will be fiscally prudent and avoid the budget blunders that led to the resignation of former British prime minister Liz Truss.

As a result, campaign promises by the far-right League party for generous pension reform have been shelved, and while the budget includes a reduction in the tax burden on labour, a major cut in income tax has been ruled out.

To help families cope with staggering inflation, which reached 12.6% year-on-year in October, according to the EU agreed index, the cabinet is considering scrapping sales tax on staples such as milk and bread.

Additional borrowing will cover some costs, but around 3 billion euros of new revenue is expected to come from a one-time tax on the profits of energy companies that have benefited from high oil and gas prices.

To make the savings, Maloney is also expected to start scrapping a poverty reduction scheme called the “citizen’s wage”.

Left-wing parties say the program is vital given the difficult state of the economy, but coalition parties say it allows the unemployed to avoid the labor market.

“(Payments) will be stopped for those aged 18 to 59 who are able to work. But it will not happen immediately. There will be a transition phase in 2023,” Deputy Secretary of the Government Giovanbattista Fazzolari told the Corriere della Sera newspaper.

Once the cabinet approves the budget, parliament will have until December 31 to pass it into law.

Source: news.ro