Italy's tax burden rises to 43.5% in second quarter as household purchasing power drops

Household finances and tax burden

Italy's tax burden reached 43.5% of gross domestic product in the second quarter of 2026, marking a 0.5 percentage point increase compared to the same period in 2025. Data released by the national statistics agency Istat on 5 October showed that consumer households experienced a 0.9% decrease in purchasing power in real terms compared to the previous quarter. Gross disposable income in nominal terms grew by 0.4% from the first quarter and 2.5% year on year. Household final consumption expenditure rose by 1.7% quarter on quarter and 4% compared to the second quarter of 2025. This gap between income and spending lowered the household saving rate to 6.7%, down 1.2 percentage points from the first quarter and 1.4 percentage points from the prior year. The implicit deflator for household consumption rose by 1.4%, absorbing nominal wage gains.

Public finances and economic growth

Public sector accounts recorded a net borrowing deficit of 2.0% of GDP in the second quarter of 2026, improving from 2.1% in the second quarter of 2025. The primary balance, which excludes interest payments on public debt, registered a surplus of 3.0% of GDP compared to 2.2% a year earlier. The current balance also remained positive at 2.9% of GDP, down from 3.3% in the equivalent quarter of 2025. Gross domestic product grew by 0.2% from the prior quarter and 1.0% on an annual basis, confirming preliminary figures. Acquired economic growth for 2026 stood at 0.8%, slightly below the government's full-year projection of 1.0%. Expansion was concentrated in services, where gross value added increased by 0.4%, while industrial activity fell by 0.6% and agriculture dropped by 0.1%. Domestic consumption and investments both grew by 0.2% in volume terms, while foreign trade detracted 0.1 percentage point from growth.

Corporate investment and profits

Non-financial corporations saw their profit share decline to 42.1% in the second quarter of 2026, dropping 0.2 percentage points from the preceding three months. At the same time, the investment rate for non-financial companies rose by 0.7 percentage points to reach 26.4%. The figures continued the trajectory observed in the first quarter of the year, where capital expenditure advanced despite tighter operational margins. Consumer association Codacons warned that pressure from international energy prices and geopolitical friction would weigh on subsequent quarters. Trade union CGIL demanded immediate measures to eliminate fiscal drag on working families.

Political division over budget plans

The publication of the quarterly report triggered immediate political exchanges as Prime Minister Giorgia Meloni's cabinet prepares its annual budget law. Opposition parties argued that rising fiscal pressure and eroding purchasing power demonstrated government mismanagement.

These data describe better than any controversy the failure of the government.

Five Star Movement leader Giuseppe Conte asserted that higher taxes were burdening the middle class, while Greens and Left Alliance lawmaker Angelo Bonelli said the administration had delivered more taxes, less purchasing power, and fewer savings. From the ruling coalition, Chamber of Deputies Vice President Fabio Rampelli defended the government during a broadcast on La7 television. Rampelli argued that the economy continues to expand despite international armed conflicts and validated ministerial economic strategy. Economy Minister Giancarlo Giorgetti is scheduled to travel to Brussels later in the week to discuss fiscal targets with European Union officials.