After opening an unprecedented August crisis for Italy, the League is also showing creativity on public finances, especially as regards VAT and the deficit. In an interview published on Monday in the newspaper The print, the Carroccio economist Claudio Borghi – chairman of the House Budget Commission, as well as theoretician of minibots – assures that the maneuver of a possible Salvini government the result of early elections "is already written" and contains an infallible recipe to prevent VAT from rising.
In essence, to sterilize the 23 billion safeguard clauses, the League intends to increase the public debt, letting it rise the 2020 deficit up to 2,8% of GDP. A level lower than the 3% of Maastricht, but higher than the 2,1% foreseen in the latest Def and above all the 1,8% requested by Brussels and set as a target by Minister Tria.
Borghi says he does not seek conflict with the EU and does not want to leave the euro: “What I think of the euro is known, but there is no intention of going to beat hands for the sake of it. However, for us, there is an insurmountable point which is the good for Italian citizens. And if they don't let us do the things we deem useful, we do them anyway, unlike others who instead leave already beaten and resigned to doing what Europe tells you”.
However, the problem is in the numbers. In fact, Borghi does not mention other compensatory measures to avoid the increase in VAT from 23 billion: no cuts in expenses, no increase in tax revenues. Indeed, the economist of the League reiterates the intention to lower the personal income tax: "15% must be reached gradually, but we must start immediately and guarantee it to many". Then the defusing of the escape clauses would take place completely in deficit.
In a further clarification provided to the Reuters agency, Borghi explains that the deficit would rise to 2,8% as an "isolated accounting effect of not increasing VAT" and he adds that this level is not a precise objective, because it is too early to establish it (strange: wasn't the maneuver "already written"?), but it will certainly remain below 3%.
It's a pity that the Parliamentary Budget Office disagree with these calculations. In a hearing on 16 April before the Budget commissions of the Chamber and Senate, the president of the Upb, Giuseppe Pisauro, said that, on the basis of the latest Def, without the VAT increases and without compensations, the deficit will rise "to 3,4% in 2020, to 3,6% in 2021 and 3,8% in 2022”.
Even assuming that these predictions are wrong by several decimals, it is very probable that the cancellation of the safeguard clauses due to deficits would in any case push Italy towards the European infringement procedure. A risk that we ran just two months ago for having raised the 2019 deficit to 2,4% and which we managed to avoid only returning to 2,04% with the balance sheet adjustment in July.
