Italy to spread out impact on debt of home improvement incentives

Giorgetti also said he was opposed to parliamentary proposals aimed at easing curbs on the incentives. Italy's central bank said last month the government should eliminate the Superbonus, which is due to be gradually phased out by the end of next year, if restrictions adopted prove insufficient.

Italy will adopt measures to curb the impact of costly home renovation incentives on its massive public debt, Economy Minister Giancarlo Giorgetti said on Wednesday.

The incentives have cost the public purse more than 200 billion euros ($215 billion) over just four years. The most generous, the so-called 'Superbonus', allowed homeowners to reclaim from their taxes 110% of the cost of energy-saving building work. "We will submit our own amendment, taking responsibility for it," Giorgetti said on the sidelines on parliamentary works.

Italy's public debt, the second largest in the euro zone as a proportion of output and under close scrutiny by rating agencies, is seen by the Treasury rising to nearly 140% of GDP through 2026 due to the cost of the incentives. Introduced in 2020, the Superbonus allowed a homeowner to deduct the cost of building work from their taxes over a 4-10 year period, or use the tax credit as a form of payment when dealing with builders or banks. The buyers of the tax credit could then sell it again, or deduct the sum from their own tax bill.

The Italian government, which in March blocked the option of selling tax credits stemming from building works with few exceptions, now plans to make the cost of work done since early 2023 deductable from tax bills over a ten-year period. "Spreading over 10 years will not be an option but an obligation," Giorgetti said.

The government hopes the measure will improve the trend of Italy's debt or prevent further overshoots in the next few years. Giorgetti also said he was opposed to parliamentary proposals aimed at easing curbs on the incentives.

Italy's central bank said last month the government should eliminate the Superbonus, which is due to be gradually phased out by the end of next year, if restrictions adopted prove insufficient. The central bank's proposal "would have been welcome had it been made in 2021, 2022 or 2023, while it only comes in 2024", the minister replied.

A large part of the tax credits have accumulated during Giorgetti's watch, since the right-wing government led by Prime Minister Giorgia Meloni took office in October 2022. Italy needs to adopt a cautious stance on its creaking state finances as it is set to engage in talks with European Union authorities to comply with the latest reform of the bloc's two-decade-old fiscal rules.

($1 = 0.9307 euros) (Editing by Toby Chopra)

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