Italians are the most highly taxed people in all of the EU. Intoxicated by seventy years of governments increasingly left of center and antifascist propaganda, Italians have been brainwashed into believing in big government and centralization, Keynesian economics and binge public spending, made possible by their hard-earned tax Euros. Their income tax system is now based on five “progressive” tax brackets the highest of which reaches a top rate of 43%. For people that cannot hide their income, which accounts for the vast majority of Italians who are either civil servants employed by one of the many Italian government agencies or employees of Italy’s small and beleaguered private sector, direct taxation and indirect taxation (mostly represented by VAT), takes more than 60% of gross income. But, you can’t miss what you’ve never had and most Italians never get to see the “gross” amount they “earn” because of withholding at the source. Bellissimo!
For a wanna-be socialist state that would not be much of a problem but for the third economy of an EU that prides itself in the free movement of people, capital and goods across the borders of Member States, it is the “killer-app” that keeps investors, foreign and domestic, away.
The problems are the same as they have been since Italy stopped growing at the end of the ‘80s: A mammoth national debt equal to 138% of GDP, high unemployment and low wages for a shrinking workforce.
True, the economy has begun to grow again at 1.5% per annum but that growth is below the EU average while the country’s national debt is growing even faster, at 1.9% per annum.
On the positive side, there has been a return of “Made in Italy” such as fashion, food and cars. Production and exports are on the rise but most of its cars are produced by FCA outside of Italy. Part-time jobs are frowned upon by Italy’s labor-biased political parties and trade unions whose remedies lie in more taxes to pay for more government spending and more welfare. Recently hundreds of college graduates were given civil service jobs in the State bureaucracy, suggesting the usual solution to Italy’s chronic unemployment. A catch twenty-two situation not likely to change much even if the “center-right” coalition of parties led by Berlusconi should win today’s elections.
With poverty on the rise, the official number of Italians that have crossed over the demarcation line separating the middle class from the poor has risen since the financial crisis of 2007 from a few million to nearly 20 million or one-third of the entire population.
No wonder the main issues of interest to Italian voters are:
- Immigration, notably how to govern the hordes of migrants currently washing ashore onto Italian beaches in apparently uncontrolled numbers, how to patrol and secure Italy’s 8,000 mile long coastline; for the purpose, Italy can rely on Europe’s most powerful conventional Navy, with nearly 100 surface vessels, including 2 aircraft carriers and 8 submarines; but the political will to close off illegal access from the sea is just not there.
- Law and Order, including Self-Defense, notably how to regain control of Italy’s inner cities, stem the rise of crime and make Italians safe again, especially in their own homes and places of business, which, in addition to a review of Italy’s self-defense statute heavily slanted against citizens that, in defending themselves, dare wound or kill an armed assailant or tresspasser. All of these issues counsel a rethinking of police powers, tactics and chain of command. Currently the Italian “judiciary police” (that branch of the State Police under the direct command and control of Italy’s “District Attorney Offices”), are the ones that carry out criminal investigations decided by public prosecutors. In Italy, District Attorneys are members of Italy’s corps of judges, which are unelected and completely independent bureaucrats that also double as public prosecutors.
- Taxation and Jobs, Berlusconi’s Forza Italia – led coalition which includes a few smaller parties, which in Italy’s 70-year plus political Drang nach Osten are considered “right-wing”. Berlusconi’s coalition proposes to totally revamp and replace Italy’s obsolete and complicated tax laws with a new stream-lined system based on the flat-tax providing for a no tax area on earned income up to €12,000.00 per annum. Above that, taxation kicks-in at 23% regardless of whether the income is earned and reported by individuals or corporations. The flat-tax was first conceived by Milton Friedman in 1958. Today, it is in use in many eastern european and other countries around the world with varying degrees of success. No other party or coalition is proposing anything of the kind. Mr. B is relying on the huge savings in tax euros to attract in-bound foreign investment, stimulate the economy by increasing domestic demand and investments by the private sector. The combined effects should be a rise in investments, meaning more businesses and jobs for Italy, a hike in GDP and a reduction in the public debt as more and more individuals and businesses decide that it is more convenient to pay the 23 % tax than risk winding up on trial for tax evasion and face the criminal sanctions and stiff fines provided for tax evaders. Under the circumstances tax revenues are expected to increase overall thereby covering the cost of cutting taxes and reducing the national debt. A win-win situation for all, with the possible exception, that is, of politicians.
How Italians will vote is, of course, anybody’s guess. The political “system” has begun to retreat from attempts to modernize Italian institutions such as during the Berlusconi / Prodi governments from the 1990s to 2011. The tendency judging by today’s elections is a return to proportional representation and Italy’s fragmented parliamentary system where governments are formed in Parliament. One significant difference from what happened during the so-called First Republic 1947 – 1994 could be the result of the “big bang” of the “communists” which witnessed the disintegration of what was once the World’s biggest Communist Party outside of the Soviet Union into a number of small parties all claiming to be the “real-McCoy”! This fact should make it difficult, if not impossible, for present-day Party machineries to determine and precipitate political crises behind closed doors outside of Parliament as regularly happened during the First Republic. Tomorrow perhaps governments will rise and fall in Parliament in accordance with their majorities thanks to an open vote of “Confidence” or “No Confidence” and the President of the Republic will entrust the formation of the government to the leader of the winning coalition or Majority as provided in the Italian Constitution. If successful that leader will assume the role and title of, “President of the Council,” and become Italy’s “Chief Executive”. If that were to happen, we could finally begin to see change, however small or timid, in the making.
Done in Modena on 4 March 2018