The basic choice of the Renzi government is to focus on reducing taxes and public spending. Only in this way can growth be stimulated and only with growth can welfare be saved. The message reaches the many souls of the left loud and clear, and to tell the truth also of the center-right who ask, sometimes with good reasons, for more spending in many different sectors: from the exodus to the incompetent, from the forces of order to health and so on. .
The point is that, after seven years of recession and 20 years of growth among the lowest in the world, the absolute priority is to return to growth. If this challenge is lost, none of the many needs that emerge forcefully from society will be satisfied. This approach is a radical break with the traditional left-wing approach, which has always focused on the theme of the fair redistribution of resources, directly and through welfare systems.
In theory it should satisfy the centre-right. However, given that politics is not the privileged place for coherence, criticism rains in from the right as well as from the left. And this despite the fact that Renzi's program envisages reductions for almost all types of taxation: employee work, through the 80 euro, business, through the elimination of IRAP, work, housing, planned for 2016, still business, through the IRES reduction planned for 2017, and also self-employment, as well as employee, through the Irpef reduction planned for 2018.
By far the most relevant measure was the cut of 80 euros in favor of medium-low wage earners. Recent work by the Bank of Italy and by two serious researchers – Luigi Guiso and Stefano Gagliarducci – have shown that the 80 euros have been spent and have contributed almost entirely to sustaining consumption and GDP. This evidence should silence the many critical voices that have dominated public discourse for more than a year since this measure was announced.
As Guiso and Gagliarducci argue, the skepticism about the expansive effects of this measure "was based on arguments that were not solid in principle", as well as not being supported by any evidence. It was said that people would save the 80 euros, which therefore would go to the exclusive benefit of the banks, and the evidence was shown by the undoubtedly still depressed trend in consumption, without any attention to the counterfactual, i.e. the possible trend in consumption if there were no was the stimulus measure.
Often these things were said by the same people who were fervent about the theory of the fourth and even the third week. Finally Guiso and Gagliarducci showed that those who are struggling to make ends meet, i.e. those who are close to the minimum tax threshold (8.145 euros), have spent all the bonus money, down to the last cent. Of course it is, as any sensible person should have understood from the beginning.
The next step in the government's program is the elimination of first home taxes. It is true, as critics argue, that the tax on first homes exists in almost all countries and is a tax with little distortion. Renzi's choice can be explained by a strong and difficult to dispute intuition: in Italy in recent years the tax on the house has been the symbol of the great mess of politics, the proven proof that promises are made and not kept, the demonstration that in the end, the left is always that of the "tax and spend".
Furthermore, Italians have experienced first-hand what it means not to know until the last minute how much taxes to pay and even what taxes to pay. In short, a big mess. Let us ask ourselves whether, by getting rid of this mess, it would not be easier for us, on the one hand, to recover the confidence of Italians in the prospects of the economy and, on the other, to have the consensus necessary to complete the many other reforms that have been started - including institutional reforms, that of public administration, school, work and justice – which, together with the tax reduction, are essential to give vigor to the recovery that exists and finally put Italy back on a solid path of growth.
