After a summer soap opera that seemed endless, this evening the encore maneuver will get the definitive go-ahead. Last week the ok from the Senate arrived, today it's the turn of the Chamber, where the trust has already passed with 316 votes in favor and 302 against. The fourth version of the text has arrived in the Chamber, the one established with the maxi-amendment of September. The latest variation on a theme imposed by the ECB.
Prime Minister Silvio Berlusconi boasts of "having saved Italy", but the truth is that according to many (in Italy as in Europe) this maneuver was born old. The Government didn't even have time to convert the decree, when new measures are already starting to be talked about on the markets and in the corridors of politics. Despite yesterday's reversal, the latest Report on public finances of the European Commission speaks clearly of a possible “additional action” to be requested from the Italian Government. And tomorrow Economy Minister Giulio Tremonti will meet the leaders of ABI and Confindustria to discuss the economic growth that continues to be lagging behind. So far, the much-invoked structural reforms to encourage development have not found space in any version of the budget. This is why topics such as privatizations and liberalizations remain on the agenda.
But let's go back to what has been done so far. The objectives of the latest maneuver are to reduce the deficit to 3,8% of GDP in 2011 and 1,4% in 2012, to then reach a balanced budget in 2013. The correction will be 54,265 billion over the three years, to reach 59,79 billion in 2014.
Let's see what the final text of the new law provides:
INCREASE OF THE ORDINARY VAT RATE FROM 20 TO 21%
The surplus for the state coffers will be 700 million in 2011 and 4,236 billion a year from 2012 (almost the entire value of the maxi-amendment decided in September), to be devoted entirely "to improving public budget balances". It seems that it was Giulio Tremonti who imposed this clause, who has always been against any immediate change to the value added tax, which he would have preferred to keep as an ace up his sleeve for the fiscal delegation. The superminister would have given in only on condition that the increased revenue was destined to cover the deficit and not to lighten the cuts to ministries and local bodies, as had also been hypothesized in recent days.
SUPER TAX OF 3% ON INCOME EXCEEDING 300 THOUSAND EUROS PER YEAR
Initially, the draft of the maxi-amendment envisaged a much higher threshold, at 500 euros. Then the majority realized that in this way the levy would have been completely useless, because it would have affected just a handful of taxpayers (0,01% to be precise). In its latest version, the Irpef surtax will instead fall on the pockets of 34 Italians, for an expected revenue of 53,8 million in 2012 and 144 million in 2013. But the biggest twist comes at the end of the article in the law dedicated to solidarity contribution: the provision "may also be extended for the years after 2013, until the budget is balanced". This means that the Government has taken into account not to achieve the target set for 2013.
THE RETIRING AGE OF WOMEN IN THE PRIVATE SECTOR WILL BE ADJUSTED TO THAT OF MEN FROM 2014 INSTEAD OF 2015
The arrival at 65 will thus arrive in 2026. This is perhaps the biggest surprise, because it marks a sensational collapse of the League. Umberto Bossi had repeatedly rejected the PDL's advances in social security matters. The turning point came yesterday during the summit of 6 September at Palazzo Grazioli. However, the Northern League has held its head high on retirement pensions, which have not changed. The new pension scheme will produce the greatest effects in 2021, when the government estimates savings of 720 million. But the application to schools of the pension scheme in force in other productive sectors (retirement after at least 12 months of accruing the requirements) will produce 100 million savings in 2012 and 1,031 billion in 2013.
AMENDMENT 2002, ONE YEAR EXTENSION FOR CHECKS
The taxman will have one more year to track down the sly people who had adhered to the 2002 amnesty, but had only paid the first installment, deserting subsequent appointments.
EVASION, JAIL ONLY IF IT EXCEEDS 3 MILLION AND 30% OF BUSINESS VOLUME
In the latest version of the manoeuvre, the rule which provided for prison for the great tax evaders was lightened. For the judge to block the suspended sentence, not only must the evasion be at least 3 million euros, but the amount of the tax evaded must also exceed 30% of the turnover. It seems that Silvio Berlusconi wanted this corrective.
CUT INDEMNITIES FOR CONSTITUTIONAL BODIES UNTIL 2013
The reduction of 10% of the compensation for positions exceeding 90 thousand euros and of 20% of those exceeding 150 thousand euros will be valid for Parliament, the Government and the judiciary only until 2013. The presidency of the Republic and the Constitutional Court remain excluded from the squeeze.
CUTS TO LOCAL AUTHORITIES
Transfers to local authorities will be reduced by 4,2 billion in 2012 and 3,2 billion the following year. The cuts for 2013 will be reduced by 1,8 billion thanks to the revenue expected from the tightening of the Robin tax on energy companies.
CUTS IN MINISTEI AND REORGANIZATION OF JUDICIAL OFFICES
The endowment of the ministries is reduced by 6 billion in 2012 and by 2,5 billion in 2013. The presidency of the Council will distribute the cuts among the ministries. From the reorganization of the judicial offices on a territorial basis, the Government expects overall savings of 60 million euros.
POSTPONATION OF TFR FOR PUBLIC EMPLOYEES
Civil servants who choose early retirement will be paid severance pay after two years. Savings of 330 million in 2012 and 1,065 billion in 2013. The rule on the suppression of all entities that have fewer than 70 employees has been removed.
TRANSPOSED EU AGREEMENT ON NEW EFSF POWERS
The maneuver transposes into Italian law the European agreement of 21 July on the new powers of the EFSF, the European fund for saving states. The new law authorizes the government to underwrite its share of guarantees on the emissions made by the fund to support states in difficulty.
THE SAFEGUARD CLAUSE HAS BEEN REFORMED
If by 30 September 2012 the delegation for the tax and welfare reform (which should reduce the deficit by 4 billion in 2012, 16 billion in 2013 and 20 billion in 2014) is not implemented, the linear cut of the 476 subsidies will automatically tax and welfare payments that cost the Treasury over 150 billion a year. Alternatively, even partially, the Government could resort to a new increase in VAT.
