The taxman can play a central role in the recovery of the economy: our country needs a simple and neutral tax system capable of ensuring stability and certainty; of tax assessments inspired by criteria of transparency and predictability, with sanctioning reactions proportionate to the real gravity of the behavior of taxpayers; of a market undistorted by tax evasion. A system conceived in this way would have a strong positive impact on economic growth. On the contrary, a partial and non-organic reform would be destined to re-propose more serious problems, both in terms of revenue and of neutrality and simplicity, already within a short time. Only a radical rethinking of the tax system can bring our country back on a path of growth and competitiveness.
The tax delegation, now in the implementation phase, represents a crucial step in re-founding the relationship between the tax authorities and the taxpayer on a new basis of certainty and transparency. Two central aspects of the delegation concern the normative definition of the abuse of the right, which must limit its application to objective and clearly predetermined cases with respect to the moment of the assessment, and the revision of the system of administrative and penal sanctions. The abuse of law today is too often confused with fraud and simulation, in contrast with the constitutional principle of the legality of taxation which requires full predictability of the fiscal consequences of the company's actions: it is no longer acceptable that the legitimate tax saving is confused with avoidance or evasion.
Sanctions also represent a sore point: administrative sanctions, commensurate with the tax due and not with the seriousness of the violations, can now also be applied for the erroneous temporal attribution of income or cost components or for purely formal violations. The problem is even more relevant for criminal sanctions: while in the main advanced countries the applicability of criminal sanctions is limited to cases of fraud, in our country it can become an automatic consequence of exceeding the quantitative of a rather small amount. The implementation of the delegation offers the opportunity to take an important step and align our legal system with those of other industrialized countries.
However, the delegation does not exhaust the reform needs of our tax system, seriously distorted by two decades of ad hoc interventions to chase spending and respond to contingent situations, which have compromised its coherence and multiplied special treatments. First of all, we need an important rebalancing of the tax burdens from business and work towards consumption, assets and the imposition of polluting environmental factors, as we have been requested for some time by international organizations and the European Commission.
We need a redefinition of business income, which must be reduced to units and determined on the basis of the results of the financial statements. The unjustified differentiated treatments between production sectors, introduced over the years for revenue needs, with distorting effects on business behavior and investments must be eliminated. The incentives to reinvest profits in the firm and to link wages to productivity need to be strengthened. Finally, there is a need for a drastic simplification of the system, which makes it less distortive and allows for a significant reduction in compliance costs.
More generally, for a serious revision of the tax system, a change of cultural setting in the law-making process is in any case essential: the tax relationship - especially in the context of production activities - cannot be constantly modified for mere revenue needs, often with retroactive effects and on the basis of political negotiations which, operating along the lines of least resistance, deform the tax system and translate into operations of implicit taxation on consumers of goods and services (one strikes A, concentrated taxpayer, because it is politically less costly, leaving A to transfer the incidence of the tax to B, a widespread taxpayer).
This is one of the main negative features of our tax system, which alienates investors because it destroys the reliability of the tax system and distorts the behavior of economic operators, forcing them to fear the taxman as a continuous source of unpredictable negative events. Above all, this drift in the production of tax laws and in their application has given Italy, in the international arena, a negative reputation that is in itself even more harmful; This is proved by various documents of the OECD and other authoritative institutions which expressly relegate our country among the least reliable ones.
I. The rebalancing of tax burdens
VAT revenue in our country is lower, as a share of revenue and in proportion to income, than in other European countries; while the weight of taxes on business and employment income is higher. The Country Specific Recommendations of the European Council to Italy invite us to broaden the reduction of the tax wedge and to shift the tax burden towards consumption, sources of environmental pollution and the ordinary taxation of assets. The rebalancing of charges towards consumption can be carried out, rather than further increasing the ordinary VAT rate, with the gradual and constant convergence in an appropriate time horizon (for example 10 years) towards this rate of the reduced rates.
In order to reduce distortions, it is essential to carry out, in addition to the tendential alignment of VAT rates, an organic rearrangement of the discipline of other tax expenditures (remember that, according to recent estimates by the International Monetary Fund, these concessions absorb, overall, about 8 GDP points). The elimination of the current obsolete and sectoral incentives, which waste resources and produce distorting effects on the allocation of investments, will imply an increase in the tax burden, but at the same time a decisive improvement in the neutrality of the system. In the same way, sectoral subsidies (eg local transport, post offices and railways) must be gradually phased out, with a corresponding increase in service tariffs.
A non-secondary advantage of the proposed measures (VAT and reduction of subsidies) is that of carrying out a sort of "fiscal devaluation" which would help bring inflation back to less "pathological" levels compared to the current ones (let's say between 2 and 3 per cent compared to the current 0,3) favoring the sustainability of our public debt. Obviously, both the intervention on VAT and on tariffs and subsidies require dedicating a part of the resources collected to direct forms of compensation for lower-income taxpayers or for particular categories of them (students, commuters, etc.). Disbursements to the incompetent and, in particular, to the 'absolute' poor could be made directly by INPS rather than through forms of negative income tax.
It would be appropriate to unify the various property taxes introduced into our legal system in a contained ordinary property tax of a general nature, which exempts capital goods for productive activity. It would also be appropriate to provide for the indication of the components of personal assets in the tax return; a circumstance which would also facilitate the verification of their congruity with respect to the declared income.
The opportunity to introduce environmental taxes which, if well constructed, can stimulate economic growth can be evaluated. The current system has not yet managed to significantly reduce polluting emissions; the delegation currently being implemented allows for a profound review of the environmental taxation system - today substantially coinciding with excise duties on energy products and taxes on vehicles, to which are added taxes on emissions and landfills - providing for new forms of taxation (green taxes) aimed at encouraging virtuous behavior in the field of environmental protection and at the same time penalizing the use of more polluting products.
II. Income taxation
At the heart of a growth-friendly tax reform is the issue of corporate income taxation. We need to simplify and bring back to unity a system deformed in the last ten years by a myriad of ad hoc interventions, always justified by the financial emergency: the special rates gradually introduced for business sectors (banks, insurance companies, oil companies) must be eliminated , perhaps before the Constitutional Court does. The current fragmentation of the corporate tax system is a serious obstacle to the development of economic activity.
A fundamental issue for business income is the overcoming of the dual tax system, through the tendential convergence of taxable income to statutory profit. In an undistorted system, the tax relevance of the evaluation components of business income cannot deviate from the financial statement results. The company must therefore be left free to follow, even for tax purposes, the statutory principles followed in preparing the financial statements (principles which are governed by specific regulations). Greater freedom in the tax deduction of depreciation would allow, for example, to strengthen the investment demand by companies without causing a loss of tax revenue, but only its reallocation in time, given that the immediately deducted depreciation would no longer be available in subsequent years .
Even if the implementation of this reform, destined to produce enormous advantages in terms of neutrality and simplicity of the system, should lead to a reduction in revenue, this should be considered part of the rebalancing of the tax burdens in our system. A critical profile, in this perspective, however, remains the choice made by our country to allow the application of the IAS to the statutory financial statements, in which the widespread presence of valuation elements introduces undesirable elements of uncertainty or excessive variability in the definition of taxable income.
Reinvested profits should be completely tax-free, thus further strengthening the favorable regime already introduced with the Ace. The purpose is clear: the incentive to capitalize on companies is strengthened and the distribution of profits is discouraged.
It is necessary to significantly reduce the tax wedge, bringing it to the level of the main European competitors and to make the substitute taxation of 10 per cent of the so-called incentive salary, linked to second-level bargaining, permanent, possibly increasing the thresholds.
The pursuit of objectives of simplicity and neutrality of the corporate income tax system requires decisive action also on the matter of tax deductions and credits. To adapt the incentives to the effective core business of companies, it is necessary to limit deductions and credits to clear and predetermined regulatory objectives (essentially research and development, innovation, environmental efficiency) and to provide for a single ceiling, in relation to which each company can choose the expenses deductible. An analogous system with a single ceiling, instead of the current one based on a jumble of specific deductions and deductions, could also be applied to the taxation of personal income with Irpef.
The objective of neutrality requires that investment income - from financial assets, real estate, dividends - be tax treated in a unitary manner, ideally with rates similar to those envisaged for business income. From this point of view, the maintenance of the favorable treatment reserved for government bond yields, while increasing the rate of income from financial investment to 26 per cent, aggravates the distortion to the detriment of investment in productive activities and of flows of business brokerage. On the other hand, the low level of interest rates and the favorable market climate would have made it possible to align the tax rate on government bonds with the others without significant repercussions on the prices of bonds.
