Italy's Home-Improvement Subsidies to Cost Treasury €219 Billion, Nearly 10% of 2023 GDP

Italy's home-improvement subsidies, including the "superbonus," have cost the treasury a staggering €219 billion, nearly 10% of GDP, due to fraud, overpricing, and lack of political action, straining the country's finances.

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Italy's Home-Improvement Subsidies to Cost Treasury €219 Billion, Nearly 10% of 2023 GDP

Italy's Home-Improvement Subsidies to Cost Treasury €219 Billion, Nearly 10% of 2023 GDP

Italy's finance minister has revealed that home-improvement subsidies, including the "superbonus" and façade renovation offset, will cost the treasury a staggering €219 billion, nearly 10% of the country's projected GDP for 2023. The high cost is attributed to the program's popularity, fraud, overpricing, and a lack of political action to curb the initiative.

The revelation comes as a significant burden on the Italian government's finances, with the Meloni government already struggling with a record-breaking public debt of around 3 trillion euros, equivalent to 145% of GDP. The out-of-control Superbonus program, along with tens of billions of euros given to companies by the state without corresponding investments, has contributed to the ballooning debt.

While the government has long criticized the Superbonus as an "absolute evil," the accounts reveal a massive amount of current transfers and contributions to investments in favor of businesses and banks, which have played a role in compromising public finances. Between 2020 and 2023, a deficit of 632 billion euros has accumulated, with the National Recovery and Resilience Plan (PNRR) further complicating the situation. The PNRR collected 102 billion euros but only incurred expenses of 45.6 billion euros.

Why this matters: The exorbitant cost of Italy's home-improvement subsidies highlights the need for better oversight and management of government programs. The financial strain on the country's treasury emphasizes the importance of implementing measures to prevent fraud, overpricing, and unchecked spending, which can have far-reaching consequences for the nation's economy and future growth prospects.

As Italy grapples with the financial fallout of the home-improvement subsidies, the government faces the challenging task of reining in the program's costs while managing the country's substantial public debt. The finance minister's revelation serves as a wake-up call for policymakers to take decisive action in addressing the issues surrounding the Superbonus and other subsidies, to ensure the long-term stability and sustainability of Italy's economy.

Key Takeaways

  • Italy's home-improvement subsidies cost €219B, nearly 10% of 2023 GDP.
  • Superbonus program and state aid to companies contributed to Italy's ballooning debt.
  • Deficit of €632B accumulated between 2020-2023, PNRR further complicating finances.
  • Fraud, overpricing, and lack of oversight led to unsustainable subsidy costs.
  • Italy faces challenge of reining in subsidy costs while managing public debt.