From Thursday 2020 October 19, the advantageous taxation for the South introduced by the government with the August decree kicks off. The goal is to give breathing space to the labor market in the South, but the ambitions are rather limited. In reality, given the epochal crisis triggered by Covid-XNUMX, with this intervention the Executive is not aiming to obtain a significant increase in employment, but to prevent its collapse.
ADVANTAGE TAXATION IN THE SOUTH: HOW IT WORKS
The measure envisages a 30% cut in contributions on all employees of companies based in one of the regions of the South. In this way, labor costs are lowered, but wages remain unchanged.
TIME LIMIT
To date, the only certainty is that the advantageous taxation for the South will last at least until 31 December 2020 and will cost the State about one billion euros.
AND FROM 2021?
As for the following years, everything will depend on the European Commission. If Brussels gives the go-ahead, the government will extend the 30% tax relief until 2025. Starting from 2026, however, the relief will be less generous: 20% until 2027 and 10% until 2029.
THE EXPLANATION OF MINISTER PROVENZANO
In a letter to Corriere della Sera, the minister for the South, Giuseppe Provenzano, wrote that advantageous taxation will avoid the collapse of employment in the South, which "would widen the already dramatic gaps" with the rest of the country, above all in consideration of the high number of precarious workers in the South.
Thus Provenzano replies to the economist Francesco Giavazzi, who in an editorial in the Milanese newspaper had criticized the measure, arguing that it will not help future generations.
The advantageous taxation for the South, explains the minister, arises "from an observation: doing business and working in the South costs more, due to a productivity deficit linked to a progressive long-term disinvestment in the training, infrastructural and institutional context, aggravated by the austerity policies that followed the previous crisis”.
Provenzano admits that "the priority for the South, clearly, is the relaunch of investments", but recalls that "even before the pandemic, with the 2030 Southern Plan, the government put in place a coordinated strategy to relaunch public investments and individuals, a commitment undertaken with the PNR, which we have begun to implement in recent months and which we will now be able to strengthen thanks to the Next Generation EU".
