The parties that want to form a new government by bringing together people who until a few days ago had bloodily insulted each other, and those destined to be in the opposition, first and foremost the Lega, are in full agreement on one thing: VAT increases must be avoided. All the politicians, together with most of the commentators, believe that the VAT increase can be easily avoided by a government capable of passing in time a financial law that keeps the accounts in order, while at the same time giving ample satisfaction to the citizens with further tax reductions or with unspecified redistribution policies.
In short, it seems that the government, whatever it is, holds the magic wand, manages to perform the miracle of canceling a VAT increase of no less than 23 billion, without setting new taxes, or make corresponding cuts in social spending, and even, as Salvini said, keep the deficit below 3%.
As usual, our policy does not discuss concrete issues, but it is based on biased stereotypes, or on old parameters of right and left that by now have nothing more to say to the concrete reality of citizens. The question of VAT is emblematic in this sense. In fact, among the various ways of finding resources to implement a policy of real development, leaving the awkward position of the last wheel of the European cart, the increase in VAT would not be the worst.
In the first place, in a situation of very low inflation, even a slight increase in the rate of growth in prices would not be negative for the balance of public finances as it would improve the ratio of deficit and debt to GDP. Secondly, the higher VAT would have an effect similar to a small devaluation of money as it is not paid on exports while it is loaded on imports.
in short our goods would be more competitive compared to those of other countries, including China. Finally, the redistributive effects, i.e. the greater burden that would weigh on the lower and middle classes could easily be offset by a targeted tax reduction on the less fortunate classes, while the "rich" would pay something more on their luxury purchases.
Naturally a pro-growth maneuver and not just "redistributive" as stated one of the 5 points of the PD, should be based in addition to the VAT increase on other urgent measures such as firstly the relaunch of public and private investments, and secondly on the reduction of some expenses such as the 100 quota which has not given the hoped-for results either for the benefit of pensioners or for the creation of new jobs. Perhaps to avoid negative effects on those who had already relied on this law, the voluntary exodus measure could be strengthened with some penalties, as previously done by the Gentiloni government.
Furthermore, it must be considered that a real policy of consolidation of the public budget, together with reforms capable of stimulating the productivity of the system, would have positive effects on the credibility of our country on world markets and therefore there would be a reduction in the spread which, although reduced, still remains more than 100 points above the Spanish one and 150 points higher than the French one. This means reducing the burden of interest on our enormous public debt on the state budget and reducing the cost of money for businesses and consumers, with positive effects on the expectations of economic operators. Reducing uncertainties and creating a climate of confidence in the future would be the truly trump card for making a change in the economic situation of our country.
And also politically the fate of new yellow-red government, assuming it manages to be born, will be linked to a vigorous recovery of economic growth, and to the creation of new job opportunities, and not to bribes or privileges handed out to this or that category of citizens, bribes that do not change the general climate of confidence in our future.
This is for the economy. Then there is the immigration issue. Saying how the Democratic Party does that we need to change the page with respect to Salvini is not enough, and indeed can arouse great apprehension. Do you want to go the Minniti line, or do you plan on being open to all as some beautiful souls claim?
“Secondly, the higher VAT would have an effect similar to a small devaluation of the currency as it is not paid on exports while it is charged on imports.
In short, our goods would be more competitive than those of other countries, including China. ”
Can you really explain to me how what you wrote is possible? in my opinion, exactly the opposite effect would be obtained by penalizing domestic products.
On the export front, nothing changes with the VAT increase, therefore an increase in exports is unthinkable.
On the national front, VAT is applied to both imported and domestic products BUT this occurs with a percentage increase which penalizes the most expensive products (generally Italian ones) with the effect that the sales of Chinese products will increase to the detriment of the Italian ones, therefore there will be a further penalization of our production (with risk of job losses, in the worst case scenario)