An Italian scheme to make homes more energy efficient has been wildly popular, but the government is seeking to rein in its “out of control” costs amid fears it could send the deficit soaring.
The “superbonus” scheme, which can be used for anything from insulation to solar panels, new boilers and windows, was introduced in May 2020 to boost the economy after the coronavirus lockdown.
Environmentalists were sceptical about its benefits but Italians rushed to take advantage of the programme, in which the state paid 110 percent of the cost of making homes greener, with the subsidy delivered via a tax credit or tax reduction.
As intended, it boosted the construction sector — but it has so far cost the state 61.2 billion euros ($64.8 billion), according to the finance ministry.
Prime Minister Giorgia Meloni, whose coalition government took office in October, said last weekend the situation was “out of control”.
She said the scheme had led to fraud worth nine billion euros, while the tradeable nature of the tax credits had “generated a sort of parallel currency, and that parallel currency risks having a devastating impact on the budget”.
Finance Minister Giancarlo Giorgetti went further, describing it as a “wicked policy”.
Lorenzo Codogno, a former chief economist at the Treasury, told AFP that attempts now to quantify the impact of the scheme on Italy’s strained public finances could be “a wake-up moment for financial markets”.
He warned Italy’s deficit could be revised up substantially, while both the construction sector and the government “could have liquidity problems”.
Italy’s deficit was an estimated 5.6 percent of GDP last year and set to fall to 4.5 percent in 2023, but revised figures potentially incorporating the superbonus scheme are due out on March 1.