Bank of Italy rejects the maneuver on cash, folders, income and flat tax – Corriere.it

The Bank of Italy rejects some of the measures included in the 2023 budget law. From the initiatives regarding payments, through the changes to the Flat tax, up to the reform – and consequent abolition – of the Citizenship Income, Fabrizio Balassone, head of Bankitalia’s economic structure service, in a hearing on the maneuver hexplained what the various critical points are in the opinion of the institute. «The provisions on cash payments and the introduction of some institutes that reduce the tax burden for non-compliant taxpayers risk coming into conflict with the push towards modernization of the country that animates the Pnrr and with the need to continue to reduce tax evasion,” he explained.

The use of cash promotes crime and evasion

According to the institute, the measures regarding cash and the use of the Pos, «go in the direction of facilitating the use of cash, at a European level – argues Balassone -. While in some countries (including Germany) there is no maximum threshold, in others there are lower ceilings than that indicated in the bill (500 euros in Greece, 1,000 in France and Spain, 3,000 in Belgium). Compared to 2016, the percentage of transactions made with cash decreased in Italy, while remaining above the European average. Limits on the use of cashwhile not providing an absolute impediment to the implementation of unlawful conduct, they represent an obstacle for different forms of crime and evasion. Studies have emerged in recent years – also conducted in our Institute – which suggest that higher thresholds favor the underground economy; there is also evidence that the use of electronic payments would reduce tax evasion. Even the Recommendations for Italy formulated by the EU start from this assumption: in 2019 it was suggested to “fight tax evasion, in particular in the form of omitted invoicing, among other things by enhancing mandatory electronic payments”, also through a lowering of the legal limits for cash payments. The definition of effective administrative sanctions in case of refusal of private suppliers to accept electronic payments was included among the goals of the Pnrr for the first semester. With reference to the charges linked to transactions carried out using electronic payment instruments, it should be remembered that even cash has costs linked to security (connected with theft, transport of valuables, insurance). Our estimates for 2016 indicate that, for merchants, the cost of cash as a percentage of the transaction amount is higher than that of debit and credit cards», he concluded.

Rdc, the critical issues of the reform

Furthermore, with regard to the basic income, the head of the economic structure service of the Bank of Italy explained that its introduction represented a significant change for the welfare structure in our country. «A form of minimum income to support the most needy families is present in all countries of the Euro area and in many it is universal – he added -. In recent years, the subsidy has first contributed to containing the negative effects of the Covid epidemic and then to supporting its purchasing power, which was particularly affected by the recent inflationary shock”. Balassone then recalled the Istat data, according to which in 2020 without the Rdc, about 450,000 more households, equal to one million individuals, would have been classified in a range of absolute poverty. Bankitalia does not intend to deny that the current structure of the subsidy is devoid of critical aspects. “The overall reform announced by the government could be an opportunity to resolve this ambiguity and strengthen the effectiveness of the measures in reaching situations of need”. Balassone then pointed out that «the radical changes in production paradigms underway at a global level could make the skills of many workers are obsolete, requiring a strengthening of income support measures. In implementing the measures, it will be necessary to pay attention to the risks of increasing poverty in areas where the Citizenship Income is more widespread and the labor market is structurally malfunctioning, areas already characterized by higher poverty rates. The reduction in the monthly benefit envisaged for 2023, intended for households identified on the basis of age and health conditions, could also concern households that are difficult to find an alternative source of income on the labor market, moreover in a context of economic slowdown and with a significant increase in the cost of living (the amount of the cheque, moreover, is not indexed to the evolution of inflation). The effectiveness of strengthening the training obligations for the beneficiaries through the professional retraining system presupposes an adequate offer of courses, the quality of which is appropriately verified, in the economically less developed regions of the country».

The penalties of the Flat tax

The Bank of Italy then reports a discrepancy in tax treatment between employees and the self-employed, among which there is also an increased discrepancy between subjects subject to the flat-rate regime and those excluded. Fabrizio Balassone explained that «in a period of high inflation, the coexistence of a flat tax regime and one subject to progressiveness such as Irperf entails a further penalty for those subject to the latter. The expansion of the number of taxpayers who access the flat-rate scheme further narrows the scope of application of the progressive nature of our personal income tax system, which, as you know, is guaranteed by Irpef. The existence of excessively differentiated tax regimes between different types of workers also poses a significant issue of horizontal equity, with the risk of treating individuals with the same ability to pay in an unjustifiably different way». According to Bank of Italy, the Flat tax as reviewed by the government entails a penalty for employees subject to personal income tax, since “any adjustments to wages to the higher inflation will result in a larger share of income subject to a higher marginal rate (the so-called fiscal drag ), to which, on the other hand, taxpayers of the flat-rate regime are not subject”.