Il Super bonus and the facade bonuses are costing the State over 170 billion of euros between 2021 and 2023, equal to approximately three percentage points of annual GDP. Surprisingly, a quarter of this figure, as much as 45 billion euros, Was wasted: those building investments would have been made anyway, without any need for public incentives. This "deadweight loss", never before quantified, is now certified for the first time by Bankitalia. Not only. Second Via Nazionale the measure was not self-financing. The tax revenues generated by the bonuses were significantly less than their cost, further increasing the public debt that will be repaid in the future.
The construction crisis and the 2020 bonuses for recovery
During the 2010s, the construction sector in Italy he faced one severe crisis due to structural and cyclical factors, including the global financial and sovereign debt crises. Investments in housing have suffered a significant contraction, reflecting the fragility of the real estate sector due to demographic decline and slow economic growth.
The Covid-19 pandemic has accentuated this crisis, with a sharp decline in investments in the second quarter of 2020. However, the introduction of the facade bonuses, which offered up to 90% tax deduction for the recovery of external facades, and the Super bonus 110%, which allowed deductions of up to 110% for energy and structural improvements, spurred a rapid recovery. These incentives allowed beneficiaries to choose between direct discount on invoice , transfer of tax credits, encouraging significant investments in the construction sector.
However, according to Bank of Italy, although the bonuses have played a crucial role in reviving the sector, they have come at a high cost to public finances, without generating sufficient tax revenue to cover their costs.
Super bonuses and facade bonuses: the impact on investments and GDP
To examine the economic impact of the two tax credits, researchers at Palazzo Koch used the synthetic control method, a variant of the differences-in-differences approach. They created a synthetic control group composed of countries that did not receive the incentive, aiming to reproduce the characteristics of the treated unit in the period before the intervention. By comparing the subsequent performance of investment per capita in real terms between the synthetic control group and Italy, they estimated the treatment effect.
Super bonuses and facade bonuses have certainly incentivized both, but not to the extent of self-finance. At the end of 2023, the real estate investments per capita in real terms were 67% higher than a “control group” of comparable European countries that had not adopted similar programs. However, a quarter of these investments would have been made anyway. Only 73% were truly additional.
The boost to GDP was not complete. The fiscal multiplier it is slightly less than one, which means that the ratio between the GDP generated by the bonuses and their cost was not equal. Every euro of public spending produced less than a euro of tax revenue. The lower multiplier is consistent with the "deadweight loss", i.e. the almost free financing of renovations that would have been done anyway. Thus, if Italy's GDP grew by 13,5% between 2021 and 2023, the two building bonuses are responsible for around 2,6-3,4 points, around one point of GDP per year versus three of cost.
Incentives too generous
Bank of Italy confirms that Superbonus and facade bonuses have contributed to three quarters to growth of added value in the construction sector. In contrast, other sectors showed a more moderate recovery. However, it is underlined that the analysis carried out does not allow a complete evaluation of the programme. Economists have limited the investigation to additional investments and GDP, neglecting the environmental impact and energy efficiency of buildings, earthquake safety, the transferability of tax credits and the effect on construction prices. However, it is possible that some of the problems not examined by Bankitalia may have had consequences negative, creating uncertainty among grant recipients and implications for the public budget.
The conclusion is clear: overly generous incentives, without income limits and with high rates which implied no or minimal costs thanks to the transfer of credit and the discount on the invoice.
A situation out of control: criticism from Bank of Italy
During the 2020 pandemic, bonus decisions were made under suboptimal conditions, lacking thoughtful decision-making. However, Bank of Italy harshly criticizes the subsequent management, accusing it too broad regulations and persistent until the almost definitive stop in April.
This has led to what has been described as “the largest fiscal stimulus for the construction sector introduced across the EU in the last two decades” to spiral out of control, with devastating consequences on the deficit and on debt, the repercussions of which will be felt for years.
