On one side the industrialists and the OECD, on the other the traders and the consumers, in the midst of the doubts of Brussels. In addition to making ends meet, the Letta Government must dialogue with a long list of interlocutors. Whether they are for, against or simply perplexed, everyone is interested in the next crucial intervention on the Italian political agenda: the abolition of the increase in the third VAT rate, which - without further interventions - will automatically rise from 21 to 22% next month. The Executive has only two weeks to postpone the shooting. The required coverage amounts to one billion euros.
THE POSITION OF THE GOVERNMENT
"It is very probable that VAT will not increase", Flavio Zanonato, Minister of Economic Development, tried to reassure last week. A bipartisan commitment: "In a few days a decree will be passed not to increase VAT, with the relative coverage", announced the PDL group leader in the Chamber, Renato Brunetta, specifying that later, "in the Stability law, there will be an overall reform of VAT taxation”. For once, Brunetta agrees with Stefano Fassina (Pd): "The VAT increase would be very negative: it would have a very heavy recessive effect, it should be avoided", said the Deputy Economy Minister, underlining that the intervention on the tax takes priority over any reduction in the tax wedge.
CONFINDUSTRIA AND OECD
A clarification that aroused the reaction of industrialists: "For the revitalization of the real economy, it is much more urgent and necessary to reduce labor costs and rebalance the tax burden on payroll rather than intervene on consumption taxes and, therefore, on VAT", Fulvio Conti said today, vice president and head of the Confindustria Study Centre.
Viale dell'Astornomia's conclusions coincide with those of the OECD: "We have said and reiterated it several times based on very broad empirical evidence - said Piercarlo Padoan, chief economist and deputy secretary general of the organization -, we need to move from taxation of incomes to that of consumption and assets. If the cost of labor falls and if firms have a more solid confidence situation, they will invest more and labor incomes will rise. It is not true that if the VAT is not lowered, consumption will not be sustained: it will be sustained anyway, but through another path”.
CONFERERS AND CONSUMERS
As expected, the position of Brunetta and Fassina is instead appreciated by Confesercenti. According to the president of the merchants' association, Carlo Sangalli, "the increase in VAT, also in the light of the first timid signs of recovery which have not yet affected the real economy, would nip in the bud any possibility of an improvement in consumption and the consequent consolidation of the economic framework. In short, reducing the tax burden, and not increasing it, remains the priority".
The consumer associations also follow the same line: "In the context of the debate relating to the elimination of the VAT increase and the cut in the tax wedge, we are convinced that the need for intervention on VAT prevails - write Rosario Trefiletti and Elio Lannutti, respectively presidents of Federconsumatori and Adusbef – . It would be a demented and irresponsible operation, capable of causing profound damage to the entire economy, especially in a phase characterized by a strong crisis in purchasing power and a serious contraction in consumption".
THE CONCERNS OF BRUSSELS
Regardless of how the resources will be used – whether it is to avoid the VAT increase or to reduce the tax wedge – Europe is alarmed by the overall tightness of the Italian public finances. Only four months have passed since Brussels closed the infringement procedure for excessive deficit against our country, but the EU authorities have already underlined that this year Rome risks exceeding the fateful 3% threshold again. This is why Olli Rehn, European Commissioner for Economic Affairs, is expected on Tuesday in the Italian Parliament for a hearing.
