“We are making an incredible effort not to create new taxation.” The words spoken by Prime Minister Giuseppe Conte last Wednesday do not lead to optimism. It is therefore necessary to see what the starting data are to prefigure a scenario that, unfortunately, is beyond the future, but could become terribly current.
Last August Italy had a public debt of 2,578.9 billion euros, a monstrous value “risen” with the emergency decrees which led to a budget gap of 100 billion. To these must be added the additional 22 billion in deficit envisaged by the 2021 Budget Law. This discourse does not include the over 120 billion that the country should benefit from the Recovery Plan or the 37 billion of the Mes sanitary if requested.
The Nadef while serving the hypothesis of a second lockdown (collapse of GDP from -9 to -10.5% in 2020), is above all aimed at putting public accounts back on track in the medium term, i.e. by the end of the decade. Considering that the average life of the Italian public debt is about 7 years, this means that Prime Minister Conte and Economy Minister Gualtieri (pictured) have formally committed with the EU to repay the largest deficit in that horizon. This means committing not only to repay the 22 billion of the 2021 budget but also something of what has already been borrowed on the market, that is, if not all the 100 billion at least a good half. This means that every year of the next decade the state will have to ensure, at least, between 5 and 7 billion in higher revenues.
How to take them? The Spanish example is not encouraging. Prime Minister Sánchez has launched a budget with a mini-capital, an increase in personal income tax rates on high incomes and an increase in capital gains taxes as well as various green taxes. And in the majority, starting with Leu, there are those who would like to follow his example. The thought goes back to 1992 when a forced withdrawal on current accounts was introduced. As of September 30th, there were 1,682 billion euros on bank deposits, the equivalent of Italian GDP. Just “grab” a 3 per thousand to bring in cash 5 billion in one go.
However, it would be an extraordinary entrance. To ensure constant income, it would be enough to increase the 26% rate on capital gains, dividends and bond coupons as well as substitute taxes on the value of pension funds. In 2019, these taxes generated revenues of over 10 billion euros, so increasing them could recover at least one billion. Another 4 billion could be added by reintroducing the IMU on the first house (hypothesis supported by the EU Commissioner Gentiloni) or by reshaping the cadastral estimates.
Indirect taxes also leave room for maneuver on the balance sheet. It would be enough to adjust the stamp duties (in total 6.5 billion in 2019), first of all that on current accounts or that on inheritances and donations which last year drained “only” 766 million. The choice, as you can see, is wide. This is why, unfortunately, we must be afraid.
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