Italy scraps green tax credit scheme as construction sector suffers

theguardian.com:

The Italian government has scrapped a generous tax credit scheme aimed at making homes more energy -efficient amid warnings of dire effects on the construction sector.

The popular Superbonus 110 initiative, which entitled homeowners to a tax credit of up to 110% on the cost of upgrading their property, led to a surge in home renovations and helped to fuel Italy’s economy after the effects of the coronavirus pandemic.

But it has also cost the government more than €110bn (£97.8bn), pushed up the cost of building services and been blighted by widespread fraud.

Giancarlo Giorgetti, the economy minister, told a press conference on Thursday that the “reckless policy” was a threat to public finances.

“We have decided to stop the effects of a wicked policy that has benefited a few citizens but has placed a burden on each of us from the cradle onwards of €2,000 per head,” he said.

The Superbonus 110, part of a series of green home bonus schemes that have also ended, was a flagship policy of the populist Five Star Movement and introduced by Giuseppe Conte’s government in 2020.

Homeowners could claim the subsidy by subtracting the costs of works, such as installing insulation systems, heat pumps and solar panels or replacing an old boiler, from their tax returns over a five-year period, or pass the onus on to the building contractor, who subtracted it from their taxes or sold the credit to a bank, which in turn was refunded by the government.

Prime minister Giorgia Meloni’s cabinet approved an urgent law ending the tax credit scheme, but said work that has already begun would continue.

The Superbonus was also criticised by former prime minister Mario Draghi, who described it “a system with very few checks” after it was revealed that