The recent increase in the tax rate on financial annuities in itself is neither right nor wrong. What is worrying, however, is the method adopted. Once again, in fact, it was decided to hit investors with the aim of raising cash rather than trying to include the rate increase in the context of a more general review and simplification of the charges and taxes that weigh on savers and intermediaries.
The rate increase was decided on the basis of apparently acceptable but, in reality, at least partly wrong assumptions. Firstly, an explicit choice was made to transfer resources from savers and finance (the bad guys) to businesses and the real economy (the good guys). You actually have to be careful about making these simplifications. The financial markets play an essential role in corporate financing and, in our country, there has been too little, certainly not too much finance. If companies, even the smallest ones, had historically been encouraged to resort to the capital market instead of relying solely on bank credit, perhaps today the problem of the "credit crunch" would have been less serious.
Secondly, it has been said, our tax rates have so far been too low compared to those prevailing in other European countries. Indeed, the levy in Germany, France and Spain seemed to be higher, in truth not so much on interest as on "capital gains". However, the result of the comparison is reversed if we take into account the other taxes which weigh on savings in our country for various reasons. Consider, for example, the stamp duty on securities deposits or the tax on financial transactions – the so-called Tobin Tax – which, having been introduced only in France and Italy, is also having significant distortive effects. In fact, compared to a very modest overall revenue, due to the transfer of activities to other financial centres, there was a decrease in trading on our markets equal to approximately one month of work on the stock exchange! This is why the revision of the rates should have been accompanied by an overall assessment of the various taxes and perhaps by the elimination of those levies, such as the Tobin Tax, which are useless in terms of revenue and harmful to our financial centre.
Finally, another aspect of the decree that raises doubts is the decision to exclude government bonds. The reason given is that they are mainly held by legal entities for which the change in the rate would have had no effect since the interest income is included in the company's overall income. Here too, however, apart from the effects on revenue, the potential distortions caused by this decision were not taken into account. It is not clear, for example, why those who finance other countries by buying Bunds or OATs should be encouraged and those who finance our companies or our banks by buying bonds or deposits should be penalised... Among other things, the government and industry finance are trying with difficulty to launch the so-called mini-bonds market precisely to help ease the credit problem for small businesses. Well, since we have been talking about it, the tax on these instruments has gone from 12,5% to 20% and will now rise to 26% while that on government bonds has remained unchanged at 12,5%. Certainly not a great encouragement for the new project!
In conclusion, the feeling is that, due to haste, the opportunity has been lost to give a real sign of discontinuity with respect to the choices of the past, impromptu and aimed only at raising cash. As Einaudi said, "Taxes must be few, simple, without surcharges and without cheating": the hope is that in the coming months the recent decisions will be included in a broader process of review and simplification of taxes on savings and on the markets of capital which also aims to make taxation less penalizing for our financial industry than its European competitors.
