The Italian taxman is a mess and the relationship with taxpayers, despite numerous attempts at "reconciliation" is more tense than ever. The high level of direct and indirect taxation that distinguishes our country makes citizens and businesses increasingly impatient with the system. What to do?
"Reforms need to be made”. A mantra that we hear repeated on a regular basis by all the Governments that take power. Everything needs to be reformed, not just the tax authorities, but also jobs, health care, justice and pensions. But are we really sure that this is really what the country needs? Looking at the numbers it would seem not.
“In the last 20/25 years, the justice system, with reference to businesses, has undergone 12 reforms. The system for business crises has undergone 7 reforms. The labor market has also had 7. The pension system, which should ensure peace of mind for elderly people who have left work and for companies that have to manage their personnel, has had 5 reforms. What about the taxman then? The corporate tax system has seen a succession of 9 relevant reforms (almost once every two years)”. These are the data provided by the president of Assonime, Innocent Cipolletta, during the biennial assembly of the Association which brings together joint-stock companies. Reforms are therefore being made in Italy, the problem is how these changes are implemented and above all their purpose. Taking the tax authorities as an example, Cipolletta explained that "the sector of the legal system that has been the subject of continuous and detailed modifications the most over the last twenty years is the tax one". What has been achieved? “A chaotic and constantly changing tax system, lacking that clear long-term policy design”.
The reason is obvious: according to Assonime, the reforms implemented more often aim more at "cancelling and replacing what the previous government did" than at "putting an end to the irrationality of the system".
In the report on "The Italian economy between reforms and regressions", the Association reviews the continuous regulatory changes that have characterized the Italian tax authorities.
We start from the Tremonti reform of 2003, which is recognized as a tangible attempt at "systematic reorganization and simplification" and we arrive at the "many second thoughts" that have characterized the existence of IRES over the years, up to the reduction of the rate from 37% to 28,5% (in 2008) and then to 24% in 2017. And what about the repeated interventions aimed at promoting investment and capitalisation of businesses: from Visco's Dit (Dual Income Tax) to the Tremoti subsidy, up to the Ace, in turn replaced with a sort of dual tax "limited to specific purchases of capital goods and increases in employment", underlines Cipolletta.
No less chaotic is the universe of sole proprietorships subject to personal income tax. The IRI had been created – announced several times and never entered into force – only to opt for the flat-rate scheme at 15% up to 65 thousand euros which, according to Assonime, "arbitrarily breaks the progressive income tax curve, creating unevenness", but which above all "leads one not to declare professional and business income which may lead to exceeding the threshold of 65 thousand euros.
In this continuous modification of what had already been modified in order to "modify it better" not even Irap was saved. The regional tax on productive activities has undergone so many and such changes as to have “lost its original nature as a tax on the value of production”, reads the Assonime report.
Impossible then not to talk about tax benefits in force, on which the judgment of the Association led by Cipolletta leaves no room for doubt. There are many "of little effectiveness and often with high revenue costs".
This is the chaotic, complex, even schizophrenic face of the Italian tax system, in which everything is thrown away every two years without real long-term planning.
So let's go back to the initial question: do we really need reforms? According to Assonime "most of the reforms that Italy needs do not require new regulatory interventions. The real challenge is to ensure the good management of the existing structures, the gradual but constant simplification of the institutions, a more stable legal framework and greater attention to the quality of the laws and of the management of the public administration.
