The discussion on the 2019 maneuver has just begun, but chaos is already reigning. In the space of a few days, two government summits have not produced any decision, except to postpone the match to September, when the update note to the Def will have to be launched. Meanwhile, a case breaks out among the members of the executive regarding the fate of the VAT and the 80 euro bonus. The question obviously concerns the coverage of the Budget law, this year particularly difficult to find. For two reasons.
BASIC COSTS OVER 22 BILLION
First of all, by adding the price of the stop to the VAT increase (12,4 billion), the expenses that cannot be deferred (3,5 billion), the additional costs linked to the slowdown in GDP (2,5 billion) and the increase in interest on the debt produced by the rise in the spread (4 billion), the new maneuver costs money from the outset more than 22 billion euros, already the value of an entire financial.
MORE THAN 70 BILLION FOR FLAT TAXES, CITIZENSHIP INCOME AND PENSIONS
Secondly, to this sum it is necessary to add the resources for the peak measures of the yellow-green contract. In the original version, the flat tax the Northern League cost just under 50 billion, while for the pentastellato citizen's income there was talk of 17 billion. Then there would be the counter-reform of pensions: the government agreement envisages allocating 5 billion for this purpose, but according to Tito Boeri, president of INPS, "overcoming the Fornero reform through a quota of 100 between age and contributions or with 41 years of contributions at any age would have an immediate cost of 15 billion and, when fully operational, 20 billion a year”.
There are no covers to carry out these projects. The two deputy premiers, Luigi Di Maio and Matteo Salvini, will have to be content with inserting only a first version into the manoeuvre and, too of the measures promised in the electoral campaign, but even this effort will not be enough to solve all the problems. However, there are still many billions to be found. Too many, perhaps.
VAT AND BONUS 80 EURO
To raise cash, the Minister of the Treasury, Giovanni Tria, has put forward two hypotheses: to let the VAT increase start from 2019, at least partially, and to cancel the 80 euro Irpef bonus.
The Mef, in harmony with the Quirinale and with Brussels, has as a priority the balance of the accounts to reassure the markets. A goal that however clashes with the electoral interests of Salvini and Di Maio, who, in view of the 2019 European elections, do not intend to expose themselves to the accusation of impoverishing Italians.
The answer to Tria was clear: "The government does not think of removing the 80 euros and does not want to increase VAT," the leader of the League wrote on social media. The political leader Grillino echoed him closely, using (perhaps unknowingly) a Berlusconian expression: "We will not put our hands in the citizens' pockets - said Di Maio - We will not pull the blanket over on one side to find out on the other" .
An alternative idea comes from the deputy minister of the economy, the Northern League supporter Massimo Garavaglia, who proposes not to cancel the 80 euros, but to transform them "from a bonus into a tax reduction". Even if the project saw the light, it would be largely insufficient, since the 80 euro bonus is worth just under 9 billion a year. But the intervention suggested by Tria's deputy would have the advantage of lightening the deficit, because the measure - currently classified as "social spending" - would be absorbed into the new flat tax.
DEFICIT: WE'RE GOING TOWARDS A CLASH WITH BRUSSELS
The deficit is the other major issue at the center of the negotiations. Salvini and Di Maio would like to step on the spending accelerator to keep (at least in part) electoral promises, while avoiding excessive cuts on other fronts. This is why the negotiations with Europe have already begun for a few weeks.
The Gentiloni government had assured Brussels that in 2019 Italy's deficit/GDP ratio would not exceed 0,9%. In the note updating the Def expected by September, however, the new Executive is preparing to insert a very different figure: we are talking about 1,7-1,8%. Basically, our country would demand a 15 billion euro surplus of flexibility, just under 1% of GDP. A much higher figure than those discussed in the recent past, when our country obtained (with difficulty) concessions in the order of a few decimals.
However, the Conte government is convinced that forcing will be successful, as long as the deficit/GDP remains below 2% and the structural deficit (i.e. net of the economic cycle and one-off measures) remains unchanged.
