Last year the tax burden in Italy increased, going from 42,8% in 2020 to 43,5%, the highest figure since the beginning of the historical series, in 1995. However, at the same time tax breaks have increased , so in the end the effective tax burden is lower, equal to 41,8%. However, the figure is higher than that of 2020 (41,4%), but the increase on an annual basis is decidedly smaller. The analysis is contained in an article published by the Observatory on Italian public accounts.
The increase in the tax burden
In detail, the tax burden increased by 0,4% mainly due to indirect taxes, in particular VAT, whose revenue grew much more than GDP last year, due to the partial shift of consumption from services to goods (particularly durable) and by the greater use of cashless payment instruments.
Furthermore, the Observatory continues, "some minor indirect revenues contributed, such as revenues from games and lotteries and excise taxes on energy products, mainly due to the recovery in gaming and transport volumes after 2020 characterized by the measures to contain the pandemic ”.
The increase in tax breaks
The increase in benefits, explains the structure directed by the economist Carlo Cottarelli, is mainly due to the enlargement of the Irpef bonus (formerly 80 euros, now 100, which involves a reduction in the tax burden for employees). The extension was arranged with the maneuver of 2020 and became fully operational only in 2021.
In addition to the personal income tax bonus, other measures also played an important role:
- tax credits granted to households and businesses which are used to offset taxes and contributions;
- some tax deductions recognized to taxpayers even beyond the limit of the capacity in the declaration.
Finally, “selective” tax relief, i.e. in favor of specific categories of taxpayers or geographical areas, is also recorded as an expense. In particular, these include the subsidies introduced by the 2021 Budget Law to encourage (i) the hiring of young people and women and (ii) employment in the southern regions. These subsidies are part of expenses (in "contributions to production ”) since they are assimilated to interventions to support manufacturing companies”, concludes the Observatory.
