M atteo Renzi has decided to celebrate next Thursday in a hundred Italian cities a second party of liberation. This time, less idealistically, dall’IMU: the tax on the first house that was paid on June 16 of each year, before the government to abolish. If in the immediate future the premier line on taxes is therefore clear, in the coming months appears constrained within a funnel of European commitments and political deadlines which will eventually accumulate a large number of projects.
in October it planned constitutional referendum, while by the middle of that month the government has to send to Brussels its proposal for a Stability law. The latter, in accordance with agreements concluded by Italy soon with the European Commission, should contain a clear correction of the budget strictly 11 billion, so you can hit a 1.8% deficit of GDP ( GDP) in 2017. yet the projects that the prime minister and the government have already proposed – the flexibility in output on pensions to an anticipated tax cut on individuals – cost at least 7.5 billion deficit in more that have not yet been recognized; They would end thus to weigh on the deficit. All this, of course, not counting other expenses for at least two billion due to the refinancing of foreign missions, the revision of the contract of the state and the extension of the bonus of 80 € to the police (already granted but for now unfunded ).
the coming months therefore impose Renzi precise choices about who and who is not upset, in Brussels and in the fabric of Italian society; what and how to refer to; and how to reconcile the budget calendar with that of the referendum. It is increasingly plausible fact that the latter could come to be called the 2 or 9 October – instead of 16, as initially thought – precisely to prevent the switch from right arrivals polls the day after the adoption of a law of such a complex stability .
We see everything that is on at Palazzo Chigi tables. Renzi has said several times that action is needed on low pensions. But to extend the 80-euro bonus from 10 million employees about 2.3 million seniors with pension income less than the legal minimum (EUR 501.89 per month, in 2016) it costs 2.3 billion a year. Always on social security, the prime minister has launched the idea of the Bee: the pension advance to allow from 2017, on a voluntary basis, to leave work for up to three years before the requirements of the reform Fornero (today 66 years seven months for old age pension). This hypothesis – also to be negotiated with the unions, which ask for much more – involve higher spending for 600 million to 700 million in the first year. Would have the advantage of not deconstruct the Fornero law but, given the penalties on retirement, it is likely to be attractive only for marginal groups of workers especially in troubled companies.
Then there is the enabling act on poverty, which must be approved by Parliament. The system includes a first universal support for the poorest families with minor children, but the spending billion expected for 2017 is totally inadequate compared to the size of the problem. Today there are 4.1 million people in absolute poverty as defined by Istat: those who can not afford essential expenditures such as heating or a sufficient number of meals in the week. Renzi and Giuliano Poletti, the Minister of Labour, have promised that they will do more. In this connection it is assumed a greater expenditure of 500 million: a hypothesis of that minimum might not be enough if the government decides to pick up beyond the 8000 euro the income threshold at which no tax is payable ( “no tax area”) .
So far the interventions in favor of those who are in conditions of need. The Government has also circulated other projects. The most important is the possibility to bring forward to 2017 the reduction of the personal income tax levy on the middle class, scheduled for 2018. In particular, it would reshape the curve of rates, diminishing the very sudden change between the intermediate rate of 27% ( for incomes between 15,000 and 28,000 euro) and 38% (for incomes between 28,000 and 55,000 Euros). This is one of the most fiscally squeezed bands: while representing only 15% of taxpayers, accounts for one third of all the IRPEF revenue. It would not be an operation at low cost. For example, reduce the rate of 38% to 35% results in about 1.5 billion loss of revenue a year, even if it could restore confidence to the most ill-treated part of the productive class. And this is a goal that the prime minister has underlined several times. A high cost to the public purse would finally even the structural cut in the tax wedge, which also is discussed between Prime Minister’s office and the Ministry of Labour. One percentage point less in contributions alone would weigh less on private employees on public accounts for about 2.5 billion euro.
Basically, to crank out all the projects initiated and evoked by Renzi and his closest collaborators serving from 7000 to 8000 million euro per year. And that’s before you even finance in 2017 the adjustment of the government contracts, foreign missions and the bonus of 80 € for law enforcement. Definitely it seems too much for a government that still has to decide how to find 11 billion to comply with the agreement just concluded with the EU Commission for a deficit of 1.8% next year. In theory it should have come from automatic increases in VAT already provided by law, but Renzi said clearly that will not click.
The government will have to make choices. Renzi in the team succeed simulations of how to distribute all the ideas of Prime Minister within two maneuvers, one for 2017 and one for 2018 (assuming, of course, the executive exceeds the constitutional referendum examination and term arrivals to term by two years). Two main scenarios. The first and perhaps most plausible provides a more prudent path in 2017 and a greater impact in 2018, also in view of the elections. For next year, in addition to the regional tax on businesses cut from 27.5 to 24% (already covered) and other measures for small and medium-sized companies (The decree “Finance for Growth 2″ will soon be launched by Council of Ministers, at a cost of 150 million), there would be measures on flexibility in the age of retirement and the simple décalage temporary tax relief on open-ended contracts (those made in 2017 would enjoy the maximum discount of 3,250 Euros for 12 months , with a cost of one hundred million). This would be a limited operation, the impact on the deficit would not exceed one billion. Then in 2018 he would do the rest, perhaps engaging in law immediately to cut personal income tax rates in the year after and hoping that a real recovery finally give the government more leeway.
At the end decide Renzi and certainly the Prime Minister has also examined a second scenario. The most audacious: to anticipate the 2017 personal income tax cut for the middle class. In a (small) part it could be funded by a bonus of rehousing of 80 Euros after 1.4 million people had to return it. The revision of the bonus structure should allow a better distribution of resources in proportion to family income. Today, in a family where the husband and wife earn 26,000 euro gross per year has a bonus to 160 Euros net per month, while a family with a single income from 28.500 euro does not receive anything. Sure intervene sull’Irpef and maybe the tax wedge in 2017 means to push the deficit to 2.3% or 2.4% of GDP in 2017. That alone scenario “prudent” leads him towards the 2% and possibly beyond, well more than agreed with Brussels. In the Commission the most recent negotiations with Italy on the “flexibility” of accounts (that is, on a larger deficit) has left scars still fresh. Go and touch can have unpredictable reactions.
© ALL RIGHTS RESERVED
June 11, 2016 (edited June 12, 2016 | 10:11)
© ALL RIGHTS RESERVED
No comments:
Post a Comment