The tax burden in Italy "is high and will grow" further. The head of Bankitalia's economic research, Daniele Franco, starts from this annotation in his hearing in the Senate Finance Committee, in which he also invites us to reflect on the opportunity to reintroduce ICI also on first homes, to continue in the fight against tax evasion , to avoid linear cuts in tax breaks and instead prefer a selectivity that safeguards Irpef deductions for income from work and pensions or for dependent family members.
FISCAL WEIGHT
“The tax burden is high and will grow further in the coming years”. A "high" burden, points out Daniele Franco - "especially at work". And "in the next three years the pressure is bound to grow further as a result of the revenue-enhancing measures included in the measures to consolidate the public finances approved during the summer," he explained.
“The Update Note to the Economic and Financial Document of last September indicates a tax burden of 2013 per cent for 43,9; to this value would be added a part of the effect expected from the implementation of the delegation in question (equal to one point of GDP). The increase in the tax burden between 2010 and 2013 would therefore be between 1,3 and 2,3 percentage points”. Again: in 2010 the tax burden in Italy was almost 3 points higher than the average of the other euro area countries and 5,5 points higher than that recorded in the United Kingdom, Franco continued.
HERE
For the head of economic research at the Bank of Italy it would be necessary to reflect on the opportunity "to reintroduce the main residence among the properties subject to tax, in particular to the ICI". And he explains that "taxes on real estate are the cornerstone of local taxation in most countries, since there is a clear link between the taxable base (the value of the home) and the activity carried out by the entity that collects the revenue" .
And Daniele Franco remarks that "the ICI exemption of main homes constitutes, in international comparison, an anomaly of our tax system and exposes us to the risk of transferring a significant part of the tax burden to commercial businesses and professional studios or on owners of second homes, residing in Municipalities other than the one that applies the tax. The absence of taxation on the main residence for ICI and Irpef purposes, together with the deductibility of interest expense on mortgages for the purchase of a first home, determines an inequality to the detriment of families (approximately 20 per cent of the total , belonging for about half to the first quintile of disposable income) who live in rented dwellings".
FIGHT AGAINST ESCAPE
While the controversy over the amnesty hypothesis shows no sign of abating, the head of economic research at Bank of Italy points the finger at the need not to loosen up the fight against tax evasion. “Action to combat tax evasion remains a priority. This action increases the likelihood of a reduction - in perspective - of the high tax burden on honest taxpayers, reinforcing the incentives to work and do business".
Franco adds: "When the public finances are balanced, it will be necessary to ensure that the margins of maneuver deriving from the fight against tax evasion are used to reduce the legal rates and are not destined to finance higher expenses".
TAX BENEFITS
Rather than proceeding with the linear cut of tax breaks, it is "desirable" that we intervene with "selectivity" saving in particular, among other things, the personal income tax deductions for income from work and pensions or for dependent family members. The safeguard clause, modified by the August maneuver, recalled Franco, provides for the horizontal cut (equal to 5% for 2012 and 20% from 2013) of the exemptions, exclusions and favorable tax regimes (the so-called tax expenditures ), if by 30 September 2012 the delegation for the tax and welfare reform has not yet been exercised or does not produce at least the expected effects on public balances".
And while admitting that "the rationalization of tax expenditures is an important element for ensuring the transparency of budgetary policies"; he adds that a horizontal cut "would not represent an adequate response to the need to make the system more rational". “It is therefore desirable to proceed with a selective approach, in line with what is desirable for interventions on public spending. The choice of subjects on which to intervene should be guided by a careful evaluation”.
Attachments: Full text of the speech.pdf
