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Lower tax wedge and new IRPEF rates, this is why consumption will increase in 2024 – Turin News

Lower tax wedge and new IRPEF rates, this is why consumption will increase in 2024 – Turin News

In 2024, consumption in Piedmont will grow by 872 million euros, More than half of it ($448 million) is thanks to Cutting the tax wedge and readjusting interest rates: These two measures will reduce the tax burden by half a point, from 42.2% to 41.7%, allowing households a little more room to maneuver on the spending front. The increase in consumption would therefore be about 1%: a modest percentage, but still exponential Compared to what it would have been without these measures.

These are the expectations of the Research Office Confessors Piedmont based on estimates developed by the National Cer for Confesercenti.

“It's about – he explains Giancarlo Panchieri, President of Confesercenti Piemonte -, from U.S positive data, But these numbers are certainly not enough yet To get us out of the difficulties we have faced in recent years. Let's not forget that – despite the slowdown – Inflation leaves families with a heavy legacy in terms of prices and customs duties Force them to spend more to buy less. Furthermore, to maintain spending levels, they saved less: The propensity to save decreased to 6.2% of income available, the lowest in 35 years. The uninspiring winter sales debut is here to prove it Consumers in Piedmont remain careful and cautious in their choicesBecause the prospects are still uncertain. That's why it's necessary The tax benefits – currently limited to 2024 – have not only been confirmed, but have also been extended into 2025. We also hope to Tax exemption on salary increases: An intervention that will aid bargaining and allow households to regain their lost purchasing power more quickly and on a larger scale.

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According to the Confesercenti-Cer simulation, with interventions on the wedge and interest rates also confirmed in 2025, household spending would increase by 0.7%: this would allow Finally returning to the level of consumption recorded before the great crisis of 2007-2008. But without cutting the wedge, all this would be nullified: in this case the increase in consumption would not exceed 0.2%.

“Measures aimed at relaunching consumption – adds Pancheri – are also absolutely necessary to support small businesses, which are grappling with an increasingly worrying crisis: Also in 2023 in Piedmont the balance between openings and closings was negative For neighboring companies. Over ten years in our region The number of store openings has been reduced by 70%.Their number was 4,581 in 2013, and fell to less than 1,380 this year. According to our projections, in the absence of interventions, there may be just under 1,000 jobs in Piedmont in 2030. Which represents A problem that is not limited to the groups concerned only, but concerns everyone: Without neighborhood commerce, streets and neighborhoods would also be poorer in terms of livability, social cohesion and safety, not to mention significantly reduced choice and level of services offered to consumers.

What is a tax wedge?

The “tax wedge” refers to the difference between the employer's total labor cost and the net income received by the employee. In other words, it represents The portion of a worker's salary that does not actually reach his or her pocket Due to taxes and social contributions that the employer deducts before the employee receives his net salary.

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The tax wedge is often considered an obstacle to employment and job creation, because it can increase the effective cost of labor for businesses and reduce the disposable income of workers. To reduce the tax gap, some governments may adopt tax and benefit policies aimed at reducing taxes on labor or encouraging employment.

In short, the tax wedge is a measure of the extent to which taxes and social contributions affect the total cost of labor, which directly affects the net income earned by workers.