The Meloni government is preparing to pass its first budget law. Yes,
because last year's was in fact set by the previous Draghi governmentand the new government could do nothing but follow the lines already
drawn by its authoritative sponsor. Draghi's fans, incredibly largely
placed on the left, argue that this is precisely why last year's
economic situation was not so disastrous. Now, however, it is up to
Minister Giorgetti to manage a budget compatible with the commitments he
signed to respect the stability pact, therefore implementing significant
budget cuts to achieve a significant reduction in the deficit by 2027:
and all this without increasing taxes, as the electoral promises of the
prime minister and her majority would like.
The agreement signed allows him to spread the deficit repayment over 7
years, instead of four, so that he can transfer the deficit to the
governments that will come after 2027, when this government will
presumably no longer exist. This budget technique clarifies the content
of the agreement with the banks and insurance companies, which are
essentially asked for a loan of three and a half billion in taxes due,
which will be returned to them by 2027.
Except that, despite this, the appetites are many and robust and the
government must not only face current spending, but finally decide to
increase the allocations for the national health system, increasingly in
collapse, must invest in supporting family income, must satisfy segments
and corporate fragments that constitute the social base of the
government, continuing to provide exemptions, privileges, financing;
must find the resources necessary to continue to generously finance the
spoll system that it has set up to support its policies and manage the
institutions and the State.
Here comes the money from banks and insurance companies, voluntarily
lent without interest, instead of raised through the imposition of a tax
on profits as other governments are doing. But despite this, the
resources are not enough and so the intention to raise the three billion
in savings to be put together by draining resources from ministries
through linear cuts is confirmed: the battle between the different
components of the government on who will actually suffer the cuts is yet
to be seen as it develops, paying attention to the results that will
tell us which actions are growing and which are declining among the
different politicians. But that is not enough, we need to be able to use
taxpayers without saying it; and so here is the intervention on
deductions, including those such as "subsidies harmful to the
environment, reduced VAT rates, exemptions and changes to tax expenses
related to personal income tax". There will be an initial cut of one
billion in deductions. Each taxpayer will have a maximum "ceiling" to
spend, calculated as a percentage of income. The percentage will be
higher for incomes up to 50 thousand euros, lower for those between 50
and 100 thousand. The deductions will then be zeroed out at 240 thousand
euros. The tax discounts will concern the 19 percent deductions, such as
health expenses, mortgages, school expenses, but also those for
renovations. However, a "family quotient" will be introduced. The larger
the family, the higher the amount of expenses that can be deducted for a
total of 7.5 billion in total. For pensioners, however, a fabulous
increase of three euros per month. In homage to the increase in the
birth rate, the Plan presented to Europe for nursery schools is revised.
A place is guaranteed for one child in three, at a national level. At a
regional level, it will be enough to ensure that there are enough places
in nursery schools to guarantee the reception of 15 percent of the
children present in the territory. The Revenue Agency will have to
recover, starting from 2027, 5 percent more sums than those collected in
2024 (14 billion euros).
Finding fresh resources
There would be a way to find resources without increasing taxes and that
would be to act on the tax front, but in this field the promises are
destined to remain such. This is what emerges from the numbers released
by the Ministry of Economy and Finance itself and contained in the
"Structural Budget Plan" filed in Parliament in recent days. The
document indicates that the tax burden in 2024 should settle at 42.3
percent.
This means that overall the weight of taxes will increase again,
reversing the reduction trend inaugurated in 2020. An objective missed
compared to what was foreseen in the DEF, the Economic and Financial
Document published in the spring, which credited a reduction in the tax
burden thanks to the cut in the tax wedge and the interventions on the
Irpef rates.
Instead, there is nothing to be done, at least this year, while for the
future we will see. The discounts (wedge and Irpef), so far have had a
negligible impact on employees with incomes below 35 thousand euros per
year and will have to be confirmed and refinanced in the coming years,
becoming structural, to avoid the objections of the European Union, but
it is necessary to find additional revenue to cover the costs of the
maneuver, Hence the savings by operating on deductions, which is
resolved by effectively increasing taxes, something that the prime
minister was quick to deny.
The solution could have come from tax revenues, which this year are
sharply increasing, due to the revenue deriving from seasonal and
precarious work. Between January and August, the tax authorities
collected 6.5 percent more from employees and pensioners than in the
same period in 2023. This means that revenues for the state coffers have
grown by 23.3 billion euros.
The Minister of the Ministry of Economy and Finance agrees that the
extra revenue is, at least in part, structural and, even if the
government, as a whole, underestimates the importance of the fight
against tax evasion (94 billion) and the fundamental role of tax workers
in the recovery of the public deficit; these resources can be used to
finance expenses planned in the maneuver. Dazzled by the slogan of the
friendly tax system, the government has in fact put in second place the
professionalism of the employees of the Revenue Agency of ADM and GdF
with their ability to analyze complex data and identify evasion
phenomena through the sophisticated digital tools at their disposal,
advanced tools, such as increasingly interconnected databases, essential
to combat evasion. With the use of the Tax Registry, electronic
invoicing, financial information, cross-referencing data between the
various institutions (INPS, banks, insurance companies, land registry,
managers, ...), it is possible to identify tax discrepancies and illicit
activities. Despite this, the activities of the offices and inspections
seem to be increasingly slowing down in the absence of a strategic plan
to fight tax evasion, while policies that favor tax evaders are being
implemented, such as amnesties and tax shields that undermine the
credibility of tax institutions and generate the belief that postponing
payments over time is equivalent to avoiding them and evading.
And to say that today, exploiting advanced technologies such as
artificial intelligence could allow us to effectively monitor suspicious
behavior, identifying evasion patterns and identifying potential evaders
in advance.
For a fair and non-predatory tax system
What the right-wing government does not want to understand is that the
fight for a fair tax system does not mean increasing taxation, but
involves the adoption of an effective, fair and supportive tax system,
which is the only one that can allow a lower tax burden for everyone, as
the sacrifices required are redistributed on the basis of income. Today,
however,
in the face of the impossibility of forcing tax evaders to pay and of
inducing the owners of large fortunes to contribute according to their
possibilities, it becomes necessary to collect taxes and duties from a
certain group of taxpayers, increasing the rates in order to satisfy the
need.
It is a question here of affirming, as Padoa Schioppa did in his time,
that paying taxes is nice but that the resources needed to satisfy the
costs relating to goods and services to be provided can and must be
collected by forcing all taxpayers to pay in relation to their ability
to contribute. We must be aware that the problems of public debt are not
solved by collecting taxes from the many small taxpayers, but also,
above all, by avoiding tax dumping between the different States that
allows large companies and owners of large fortunes to save, choosing
the most favorable tax treatments, while continuing to do business and
accumulate profits in places and countries in which they do not reside
for tax purposes.
The facts show that this government's disinterest and lack of political
will in the fight against tax evasion is total: no concrete investment
is made to strengthen the resources and technological tools available to
the tax authorities; indeed, there is an absence of a strategic plan to
strengthen the staff and skills of tax workers, while cuts to funding
and staff reductions make it more difficult to control and ascertain tax
irregularities and there is a lack of valorization and support for
professionals in the sector, with repercussions on their operational
efficiency.
In fact, government inertia in the fight against tax evasion leads to a
decrease in tax controls and a reduction in pressure on tax evaders,
with a consequent erosion of tax revenues that deprives the State of
precious resources that could be used to provide public services such as
healthcare, education, and infrastructure.
Resources and investments
The lack of resources in the new financial law becomes dramatic when
compared to the lack of investment in development. The possibilities for
economic growth remain entirely dependent on the effects of the PNRR,
which on the other hand struggle to manifest themselves in the face of
the now manifest and obvious delays in the implementation of investments
to the point that it becomes dramatically necessary to negotiate with
the European Union an extension of the deadlines for the implementation
of projects since it is quite clear that those planned cannot be respected.
With Minister Fitto's move to the European Commission, the choice to
centralize the control room for all PNRR investments at the Presidency
of the Council becomes pregnant with dramatic consequences, since the
setback that is inevitably recorded due to the assignment of the person
responsible for the Plan to another role risks producing dramatic
effects on the feasibility of what the country is committed to doing.
It is no coincidence that the government has been forced, as we said, to
revise the growth estimates for next year to a paltry 0.8%, assuming
that everything goes well and that the increase in exposure to military
spending (a billion destined for Ukraine) does not force the government
to review commitments, accounts and spending possibilities.
Furthermore, given that it seems that healthcare spending will be spread
over two years, there will be protests from doctors and citizens for
better financing of healthcare spending, a real emergency together with
schools and universities for the future of the country both in terms of
welfare and the development of employment, which is at an all-time high
with the minimum number of hours worked; and this while with the
automotive and employment crisis and the entire economy of the country
are at risk of collapse and wages are starvation.
Rocco Petrone
https://www.ucadi.org/2024/10/30/una-finanziaria-truccata/
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