• The go-ahead from the government to the Def, the report on the budget variance also passes
  • Def, towards deficit at 10.4% and debt / GDP at 155%

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by Tiziana Di Giovannandrea 24 April 2020Resources to protect companies, families, health with a stop to increases in VAT and excise duties, necessary to help the country and to try to start again.

 "55 billion for families, for businesses, for health, and additional resources for liquidity and to protect our businesses. And then, we cancel all the VAT increases expected for the next few years. A powerful, unprecedented intervention , necessary to support and help the country in this difficult time, and to try to start all together ". So on Facebook, the Minister of Economy, Roberto Gualtieri, commented on the government's maxi-maneuver after the launch of the Def which, together with the new request for budgetary deviation to Parliament, serves to cover part of the measures of the April Decree. 

Gualtieri estimates that the economy will need a reasonable period of recovery: "It is clear that after a shock such as that suffered this year and which we hope will not continue even in 2021, the economy will need a reasonable period of revival during which restrictive fiscal policy measures would be counterproductive", he writes in the premise to the Def which was published by the Mef on the site.

"Given the prolonged closure of many production activities and given the need to preserve the sectors of the economy that are likely to continue to be subject to operational constraints, the preparation of two new measures was undertaken which the Government is preparing to submit to Parliament The first is a decree containing further support measures for workers and businesses to increase their resilience and better prepare for the recovery phase. The second will be dedicated to a drastic simplification of administrative procedures in some sectors crucial for the revitalization of public investment and private (especially contracts, construction, trade, controls) ", Gualtieri always states in the introduction to the Document of Economy and Finance 2020. 

Furthermore, Gualtieri highlights how with the stop of the VAT the tax pressure  goes down to 41.4%. In fact, the sharp increase in indirect taxation foreseen by the legislation in force at the beginning of 2021 would clash with the difficult phase that the country is going through. The government has therefore decided to include in the new decree the elimination of the VAT and excise tax increases expected from 2021. In a phase that we hope will be a recovery and with the rekindling of the desire to undertake and innovate, the intonation of fiscal policy will have to in fact, to remain expansive, albeit within the limits of prudent management of public finance.

And then: "In this regard, it should be emphasized that once included the effects of the decree being prepared and the benefit of the 80 euros per month (which will become 100 with the cutting of the tax wedge on already legislated work) - explains the minister - Tax burden will drop from 41.9 percent in 2019, to 41.8 percent in 2020 and to 41.4 percent in 2021. " "However, it is not too early to develop a strategy to recover from the high public debt. This strategy - underlines Gualtieri - will have to be based not only on a surplus primary budget, but also on a much higher economic growth than in the past, which it will require a revitalization of public and private investment focused on innovation and sustainability within the framework of an organic strategy to support growth and far-reaching reforms ".

The April Decree "will impact on the deficit of 2021 in an amount equal to 1.4 per cent of GDP" he says again in the premise of the Def. "It is on these numbers, and on the basis of the new macroeconomic forecasts - underlines Gualtieri - that the government accompanies this document with a Report to Parliament in which it is requested to raise the public finance objectives".

Finally, the new anti-Covid-19 intervention is of a "very significant" dimension and will have effects "for 155 billion in 2020" and "25 in 2021" resulting in a "deviation of 55 billion in terms of higher net debt on this year and € 5 billion out of 2021, net of higher charges on public debt ". It is " the most substantial economic intervention in Italian history ", says Minister Gualtieri.