“We confirm all the commitments we made when we received the assignment. Today we approve the cut of the tax wedge. After the work dl, in April we face the Public Administration, in May the taxman, in June the justice. And the next step will be the scissor-Italy, the one on municipal companies, schools and hydrogeological instability”. This is the battle plan announced last night by the premier Matteo Renzi at the end of the Council of Ministers which approved the new Economic and Financial Document (Def). The text will arrive in the Senate on Thursday next week, April 17, provided that the Budget Committee has concluded its examination.
IRPEF: 10 BILLION CUT WITH SPENDING REVIEW AND BANKS TAXATION
The most eagerly awaited measure is undoubtedly the one on the tax wedge, which provides for a reduction of 10 billion a year, so as to bring about 80 euros more a month into the payroll of those who earn up to 25 thousand euros a year. For 2014, since the measure will come into effect in May, the cost of the cut amounts to 6,7 billion. Of these, 4,5 will come from the spending review (the resources recovered from the public spending review will reach a total of 17 billion in 2015 and 32 in 2016), while another 2,2 will be guaranteed by the increase in VAT revenue and the taxation on the revaluation of the shares of Bankitalia (the rate on capital gains recorded by credit institutions will in fact rise from 12 to 26%). Coverage will be ensured by a decree that the Government will approve on 18 April.
THE KNOT OF THE INCAPIENTS
Renzi also promised "a solution for the incompetent", i.e. those who earn less than 8 euros gross a year and who therefore would not get any benefit from the Irpef relief, because they are already exempt from paying the tax.
CUT IN IRAP WITH INCREASE IN TAXES ON FINANCIAL TRANSACTIONS
As for businesses, the government aims to cut IRAP by up to 10%. A measure to be financed with the increase from 20 to 26% of the tax on financial income (excluding bots) from mid-2014.
PUBLIC MANAGERS: THE CAP ON REMUNERATION IS LOWERING
Also with the decree of 18 April, the ceiling on the salaries of public managers will go from 311 to 238 thousand euros per year, or the sum due to the President of the Republic.
PRIVATIZATIONS: 12 BILLION IN 2014 TO REDUCE THE DEBT
According to the Executive's calculations, around 12 billion euros will come from privatizations this year, which will be used to reduce the public debt. The sale of public assets should guarantee a figure between 10 and 12 billion a year (about 0,7% of GDP) also between 2015 and 2017. According to the National Reform Plan (Pnr) attached to the Def , the Government aims to sell shares of Eni, Stm and Enav, as well as various companies in which the State holds indirect interests through the Cassa Depositi e Prestiti (such as Sace, Fincantieri, Cdp reti and Trans Austria Gastleitung GmbH) and the State Railways (Big Stations – One Hundred Stations).
PAYMENT PAYABLES
Another 13 billion will be added to the 47 already allocated for the payment of public administration debts.
2014 ACCOUNTS: GDP +0,8%, DEFICIT AT 2,6%
The Def also contains the new forecasts of the Executive on public finances. Estimates for 2014 speak of a GDP up by 0,8%, lower than the +1,1% calculated last year by the Letta government, but higher than the +0,6% expected by Brussels and the International Monetary Fund in the World Economic Outlook published yesterday. deficit-GDP ratio instead, it should settle at 2,6%, to then drop to 1,8% in 2015 and 1,5% in 2016.
The expansive effect of the reforms will manifest itself "weakly" in 2014 - reads the Pnr -, but will be "gradually more pronounced" in the following years. In fact, GDP growth should be progressive: +1,3% in 2015, +1,6% in 2016 and +1,8% in 2017.
as to unemployment, after the 12,2% recorded in 2013, estimates speak of a further increase in 2014 (to 12,8%), which should be followed by a drop to 12,5% in 2015, 12,2% in 2016 and all 11,6% in 2017. Also on the front of tax burden an increase is expected in 2014 (to 44%, from 43,8% in 2013) and a decrease in the following years (to 43,7% in 2016 and 43,5% in 2017).
Il debtfinally, this year it will reach 134,9% of GDP, also considering the support for the European bailout fund (net of which it would amount to 131,1%), to then gradually drop: to 133,3% in 2015, 129,8% in 2016, 125,1% in 2017 and 120,5% in 2018.
“Italy's structural deficit will be eliminated in 2016 – assured the Treasury Minister at the press conference, Pier Carlo Padoan -. This is the government's overall strategy, and it will succeed." Therefore, once again the balanced budget has been postponed, a goal dear to Brussels, which until yesterday Italy had promised to achieve by 2015.
Padoan also clarified that "the privatizations of Enav and Poste are in the pipeline", and that the public debt "rises because Italy contributes to the funds for the rescue of the Eurozone and, above all, because nominal growth is too low. The Eurozone is expected to have an inflation rate of 2% and growth of 1%. If this were the case, we would have a growth of 3% and this, in the current conditions of Italian public finance, would be enough to bring the debt on a constant downward path".
