The Treasury is studying a maneuver set to the penalty, while the League publicly says that it will be financed in deficit. It is undoubtedly a warm autumn that awaits Italy's public finances, called to approve the new one budget law by 30 September. Barring a compromise that is difficult to predict, there are currently two possible consequences of the clash: a new conflict with Europe – which this time, probably, would not spare us the infringement procedure – or a government crisis with the risk of ending up in temporary operation. But let's go in order.
In recent weeks the technicians of Ministry of Economy they are preparing a maneuver proposal which will be submitted to the two government parties in September. The basic ingredients are three.
- Deficit-GDP cut below 1,8% (against the 2,1% set in the last Def) to meet the requests of the European Commission, which, through the mouth of the Commissioner for Economic Affairs, Pierre Moscovici, has asked Rome for "a significant structural adjustment in 2020".
- Defusing of VAT clauses recovering the necessary 23 billion from a mighty cut in tax expenditures, i.e. benefits and tax breaks, without excluding those on the home or health care. Basically, other taxes will be raised to avoid the consumption tax increase.
- Flat tax of 12 billion mainly covered with the abolition of the Renzi bonus of 80 euros, which alone is worth 9-10 billion a year. In reality, it will only be a matter of an initial reduction in personal income tax rates, not a real flat tax.
Now, how much hope is there that a similar project will get the go-ahead from the majority? We are close to zero. Claudius Durigon, Undersecretary for Labor of the League, reiterates in an interview with Messenger that the Carroccio claims "a tax shock” to be financed with a little “healthy deficit to restart the economy”. Nothing further from the plans of the Treasury, whose first objective is to avoid a new battle with Brussels. “Europe can no longer say no to us – comments Durigon – I remember that the new commissioner was elected with the fundamental votes of the M5S and therefore why should he hinder the government in this new phase of building Europe”.
On the other hand, the recipe perfected by Giovanni Tria is bound to dissatisfy even the 5 Star Movement, which will be denied the four billion requested to make an initial cut to the tax wedge.
Whatever path our country takes – government crisis or new rift with Europe – it will have to account for it to international investors, who have not forgotten our country at all. What they have given us is only "a truce - Explains Niels Thygesen, Danish economist and president of the European Fiscal Board, in an interview with Corriere della Sera – Markets always breathe a sigh of relief when a feared conflict does not materialize and the parties seem to reconcile. It happened last year in December and again in the last few weeks. For a few months the markets don't pay too much attention to it. But definitely it's a truce and it could end if there were negative developments in the European economy”.
