We have tax records and runaway inflation. Now the government is at the crossroads

Last year, the tax burden in Italy hit an all-time record of 43.5% of GDP, while in 2022, on the other hand, it is set to drop to 43.1 percent. This is what the Studies Office of the Mestre CGIA recalled yesterday, based on data from Istat and the Ministry of Economy. Only on 7 June (one day before 2021) will Italians celebrate the day of fiscal liberation (or “tax freedom day”). After more than 5 months from the beginning of 2022 (equal to 157 working days including Saturdays and Sundays), the average Italian taxpayer will stop working to pay all the tax obligations of the year (Irpef, Imu, VAT, Tari, Irap , Ires, social security contributions, etc.) and from 7 June will start earning for himself and for his family.

The usual theoretical exercise of the artisans of Mestre is interesting from two points of view. The first is that, comparing Italy to other European countries, only France among the greats has a higher tax rate. The comparison, made on the basis of 2020 data, shows that 42.8% (among other things linked to the various tax moratoriums) is exceeded among the big names of the Old Continent only by 47.9% from beyond the Alps, according to Denmark ( 48%).

The second relates to the trend of the last 28 years. The historical series, reconstructed by the CGIA starting from 1995, highlights how the earliest day of fiscal release was in 2005. On that occasion, the tax burden stood at 39 per cent and the Italian taxpayers only needed to reach 23 May ( 142 working days) to shake off all tax deadlines. In fact, 2004 and 2005 (the only two years of effective validity of the Berlusconi tax reform) were characterized by a tax burden of 39.2 and 39%, the lowest in the period considered by the craftsmen from Mestre.

It is therefore necessary to reflect on which direction to take in the tax reform: a crossroads that the Draghi government will soon have to cross. In other words, it is a question of choosing whether the tax authorities should have a redistributive function, that is to penalize medium-high incomes (4% of taxpayers over 70 thousand euros of personal income tax pay 28% of the total tax) to provide bonuses to the less haves. Or whether to cut taxes according to development, avoiding the traps of land registry reform and taxation of savings.

There are, however, two situations to deal with. The first was communicated by Fabi (the main banking syndicate) concerns the growth of about one billion in the last 12 months in unpaid installments relating to mortgages and loans granted by banks. The total number of non-performing loans of households went from February 2021 to February 2022 from 11.6 billion to 12.4 billion (+ 7% annually). The combined effect of the after-effects of the pandemic and the rise in inflation worsened the economic situation of families. The Codacons instead pointed out that the Easter lunch will cost 100 million more due to the increase in the prices of the ingredients. The main leaps are those of seed oil (+ 25.9% per year), butter (+ 17.6%) and pasta (+ 13%). For a kilo of flour you spend 10.7% more.

In 2022, the state will collect almost 40 billion in increased tax revenues. According to the CGIA, this money must be repaid by reintroducing the fiscal drag, ie the automatic adjustment of the tax levy to factors such as inflation and economic growth which generally involve an increase. In 2022, on the other hand, the tax burden is destined to decrease by 0.4 percentage points in a context of less lively economic growth. The first moves of the Draghi government were decisive. Now it’s time to continue.

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