The analysis by the Confindustria Study Center (Csc) on the measures that should be included in the Maneuver appears to be merciless: the 100 quota will increase "the contribution levy on work", the money "from the greater induced growth" will not be enough to finance the flat tax , the amnesty "creates problems for the exchequer". Citizenship income? According to the CSC, the next governments may have to "raise taxes" to finance it.
Confindustria presented the report "Where is the Italian economy going and the economic policy scenarios" and sanctioned an all-round rejection of the key provisions on which the government contract between the Lega and M5S is based. Measures to finance which the executive itself has decided to bring the deficit back to 2,4%, sending the spread into orbit and making the markets nervous.
"The government does not go back - is the response of the deputy prime minister, Luigi di Maio – those who delude themselves, like the Centro Studi di Confindustria, know that they are getting a bad idea. In the maneuver there will be all the measures provided for in the contract ".
CONFINDUSTRIA: ESTIMATIONS ON GDP AND DEFICIT
The Confindustria Study Center reduces by 0,2% compared to previous forecasts GDP estimates 2018 and 2019. In detail, in the current year the Italian gross domestic product will grow by 1,1%, while +2019% is forecast for 0,9.
The estimates, underlines Confindustria, "do not incorporate the government's intentions" pending the Budget Law but, among various factors, "weigh" also "the increase in the spread", "the uncertainty about the Government's ability to affect the nodes of the economy” and on the “sustainability of the government contract” which causes “less confidence among operators”.
Turning to deficit, Confindustria estimates for 2018 a drop to 1,8% of GDP from 2,4% in 2017 which included a one-off component linked to bank bailouts. This result "is worse than what the outgoing government imagined in April, which estimated a deficit/GDP ratio of 2018% in 1,6 for 2018". As regards 2019, the trend deficit is expected to be around 2% of GDP, which incorporates the failed increase in VAT.
In this context, it should be noted that today, 3 October, Istat released data on the deficit/GDP ratio for the second quarter of 2018. "The general government net debt as a ratio to GDP was 0,5%, compared to 2,1% in the same quarter of 2017”, reads the Istat press release which specifies, however, that the data for the second quarter of 2017 was, however, “affected (by 1,1 percentage points) by the effect of the transfer capital account operated for intervention on the crisis of the Venetian banks”.
Finally the debt: 130,9 percent in 2018 and 130,7 in 2019, a level that remains very high.
CONFINDUSTRIA: TAXES WILL INCREASE
For the economists of Confindustria "the increase in the deficit" foreseen by the Government "is small compared to the political commitments undertaken: if the coverage is not well defined - they warn - there is the risk of a higher deficit/GDP ratio ex post". The 2,4% deficit may therefore not be enough to finance all the (expensive) measures promised by the government.
So? Few will like the conclusion of the CSC: “CSC “the increase in the deficit is used to start parts of the government contract to support welfare”, such as on basic income or pensions, then “very difficult to cancel except in emergency situations. This could lead to more taxes in the future and to increase the savings rate already today”. Simply put, it will be very difficult for a political government to have the strength to revoke such measures without risking an unprecedented electoral meltdown, but to keep them alive it may have to raise taxes, triggering an endless vicious circle.
NO TO 100 FEE, AMENDMENT AND FLAT TAX
Confindustria also invites you to think carefully about the introduction of the 100 quota for pensions and the green light for the so-called fiscal peace.
With regard to the pension, the CSC invites the Conte executive to “Do not dismantle the pension reforms because this would make it necessary to increase the contribution levy on work. If the 'quota 100' mechanism, to allow early retirement, were introduced, it would instead go in the opposite direction”.
Also rejected fiscal peace: “Regular use of the tax amnesty ends up creating problems for the Treasury, jeopardizing future revenues, increasing the risk of having to adopt one-off measures also in subsequent years: a vicious circle in which the tax authority loses control of a part of the come in".
The judgment on the flat tax that "could simplify personal income tax, reduce compliance costs, increase compliance and would be more rational", it underlines. "However, it must be taken into account that the results of the CSC simulations indicate that it is unlikely that the transition to a quasi-flat tax will be self-financed with the proceeds of the greater induced growth".
THE WORDS OF TRIA
The number one of the MEF, Giovanni Tria, also spoke at the presentation of the report by the Confindustria Study Centre, with words aimed at reassuring the audience, but above all the markets.
“Starting next year, we will ensure an acceleration of debt reduction compared to the past”, the minister guarantees. For the Government, he continues, "the reduction of the public debt is of fundamental importance", a problem that "must be addressed, regardless of the constraints, to free up budget space" also for tax reforms.
And on the deficit he clarifies: in 2019 there will be "a deviation from the objectives agreed with the European commission by the previous government", but "there will then be a gradual reduction of the deficit in the following years".
Words that, however, are "attenuated" by Minister Di Maio, who, speaking simultaneously in the Chamber, for the years following 2019 liquidates the issue with a "then we'll see".
