«It's all wrong, it's all to be redone!». Hearing certain criticisms of the 2020 budget law just approved by Parliament, the mind runs to the famous one phrase by Gino Bartali.
Ginetto had to be listened to. He had gained enormous authority by winning three Tours of Italy and two Tours de France on bicycles and on roads that no one today would call such. Above all Bartali had risked his life, not so much along the reckless descents down the Stelvio or the Tourmalet, as to save many Jewish people from Nazi extermination. Therefore he was named by Israel "Righteous Among the Nations".
Paraphrasing Paolo Conte, How far in sandals have the critics ridden and how many hills have they cycled? It is not mockery, but a serious question. Because, sometimes, one should at least have experienced the sensations of fatigue and pain that shake the social fabric, in order to understand and speak with full knowledge of the facts.
This in the method. On the merits, however, we take two recurring accusations leveled at the government. One wrong and one right.
The wrong one: it is said that VAT should be increased and social contributions lowered. In this way, competitiveness is gained, because VAT is also paid on imports, while it is not on exports, and the reduction in social security contributions reduces the cost of Made in Italy. All this in theory. In practice?
There was a time when this recipe was widely practiced and proved to be very effective. It was the end of the seventies and the first half of the eighties of the last century. But what works in one context doesn't necessarily work in another.
Today the competition is played more on quality and technological innovation than on price, where emerging countries win hands down. Today, the competitive pressure is so high and the demand so low that businesses don't even dare try to pass on cost increases or higher VAT to the consumer.
Indeed, in the last two times it was increased, in August 2011 and October 2013, there were no expected increases in consumer prices. Which, incidentally, would not have been more inflation, as some persist in saying, but a step in the price level. The VAT burden was absorbed by the companies' margins. This explains the strong opposition of their trade associations to new indirect tax increases, while thirty and forty years ago they were their supporters.
The right accusation against the Government is that it preaches the fight against tax evasion well but raids it badly. Because to fight this mass sport of the Italians, neither decrees nor laws are needed anymore (the edicts of Manzoni's memory), but it is necessary to strengthen the Revenue Agency and its ability to process data and big data. My suggestion is to put the head of Google Italy in charge of the good Economy Minister, Roberto Gualtieri, and give him the responsibility for Finance. The announcement would be enough to increase revenue, as happened in 1996, when Vincenzo Visco became head of the then revenue department.
All of that said, it's worth it what I wrote on FIRSTonline on October 19th: this is the best of public finance manoeuvres, here and now. It has closed the interest rate gap with Germany. Now the challenge is to bring it to the level of those of Spain and Portugal. To this end, certain criticisms do not help.
