La fiscal budget 2024 introduced significant changes in VAT on various products. While the main attention is focused on cutting the contribution wedge, it is inevitable to consider a series of tax increases that will have significant impacts on the economic landscape.
Fiscal maneuver 2024
The 2024 fiscal measure, presented by the Prime Minister in the context of the Budget law, was characterized by the promise of a significant "tax cut“. However, the practical implementation of this strategy proved to be considerably more complex than initially stated.
La discrepancy between expectations created by promises of reduction in public spending and the economic reality is evident in the growing increase in public debt.
The phenomenon has raised questions about the sustainability and coherence of the strategy adopted. The maneuver led to a public debate on how to reconcile tax reduction objectives with the responsible management of public finances.
Furthermore, in some specific sectors, reality has shown a tax increase rather than a decrease. This triggered a critical reflection on the real extent of the expected benefits and raised questions about the coherence of the economic policies adopted.
The affected products
The discussion around the 2024 tax bill has intensified, especially in relation to theincrease in VAT on basic necessities, including products for feminine hygiene and children's hygiene. These items, in particular, will undergo a significant increase, going from 5% to 22%.
This rise involves different categories, such as diapers and powdered milk (from 5% to 10%), child car seats (from 5% to 22%), and female intimate hygiene products, such as sanitary pads, tampons and menstrual cups (from 5% to 10%).
Even gas and pellets do not escape the increase, going from 5% to 22% and from 10% to 22% respectively.
The consequences of these changes will be felt immediately, with a direct impact on gas bills starting from January. At the same time, the revocation of VAT discounts for products related to feminine hygiene and children represents a reversal compared to previous years, when these rates were lowered from 22% to 5%.
The government's justification states that this decision is necessary in response to therising inflation, arguing that the previous VAT cut proved ineffective in the face of the continuous increase in retail prices.