Italy’s Citizen Income Proposal

The Italian economy is going through a rough financial period. Not too long ago, the budget of this European economy was being approved by the European Union. The EU has been helping Italy on the condition that it will keep public expenditure to a bare minimum. However, Italy has now decided to launch a very ambitious citizen’s income scheme. This scheme is being launched despite the protests from other European Union members.

Italian politicians believe that poverty in Italy has reached unprecedented levels. About 20% of the Italian population is close to the poverty line with about 10% who face the risk of serious deprivation. Also, Italy has an overall unemployment rate of 10.5%. According to analysts, this rate has been severely understated. The unemployment problem is most pronounced in the southern part of Italy. The politicians claim that these factors are the basic reason that they have been egged to launch the citizens’ income plan. However, it is also likely that the scheme has been implemented because of purely political reasons.

In this article, we will have a closer look at the details of the citizens’ income scheme being implemented by Italy.

Italy’s Citizen Income Plan

The citizen income plan is simply a less radicalised version of the universal basic income scheme. This scheme will provide assistance to families who are making less than 9400 euros in a year. There are also certain other conditions. For instance, the family must not have another house whose value is more than 30,000 euros. Also, the person must not have purchased a car in the last six months.

Also, 9400 Euros a year works to about 800 Euros in a month. Hence, if a person makes about 500 Euros, they will only receive an additional 300 Euros. This 800 Euro limit is for an individual. There are similar limits for families with varying number of adults and children.

How It Is Different From Universal Basic Income

The Italian plan is being compared to the idea of universal basic income which is being discussed worldwide. However, the citizens’ income plan has made attempts to avoid shortcomings of the universal basic income idea. Some of the major differences between these plans have been listed below.

• Firstly, the Italian citizens’ income is not an unconditional payment made by the state. There are a lot of conditions which will be attached to the payment. The person receiving the payment is obligated to take a job when provided by the government. The government will give the recipient three chances. During the first chance, they will be provided a job within 100 miles of their home. During the second chance, they will be provided a job within 250 miles of their home. Lastly, during the third chance, citizens will have to accept the job regardless of where it is located in the country. After the three chances are complete, the government will stop making further payments to the concerned individual. The Italian government wants this program to be a safety net during a temporary period of transition. It does not want its citizens to become permanently dependent on this welfare scheme.
• Secondly, the government does not increase the payment in proportion to the number of people. For instance, if there are two adults with a child, they will receive about 1100 Euros per month. Two adults with three children will only see an increase of 200 Euros per month. For more than three children, the government is essentially not going to increase the compensation.
• Also, the Italian citizens will not be free to use this money for any other purposes. This is because the money will be paid via a prepaid debit card which can only be used at certain locations and for certain purposes. Also, users can’t store the money. If they do not use the money by the end of the month, it will expire. Credit has to be given to the Italian government for trying to build a fool-proof program. However, in real life, these rules mean almost nothing. There is always a certain black market provider who is willing to help people circumvent these rules in return for a fee!

The Problems with Italy’s Citizens’ Income Plan

• Tax Avoidance: Italy has a major problem with tax avoidance. Most Italian citizens do not file their tax returns. Hence, the government is unlikely to really know who the actual recipients of the program should be. There is a good chance that this program will be viewed as a chance to obtain free money from the government and will be misused.
• Doesn’t Work: Also, the empirical data related to such schemes paints a dismal picture. Schemes like these have already been implemented in Finland. Although Finland’s economic problems are not as big as Italy’s the country found the program to be very expensive. The government found that it was not able to reduce poverty or unemployment significantly. However, on the other hand, it ended up raising the taxpayers’ bill significantly.

The bottom line is that the Italian government has just started a bold experiment. The entire world will be keenly watching the outcome of this experiment in order to decide on their own policies. However, if Italy fails, it will have to bear the brunt on its own. It is unlikely that the European Union will provide any further assistance to the state.

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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.