The real problem of the tax reform is not the flat tax, but everything else

Many observers have focused on slamming the “flat tax”, which will never happen. But the most important criticisms of the Bank of Italy, in terms of fairness and efficiency, concern what the government wants and can do: from the incremental flat tax to the dry coupon

Much prominence has been given to criticism of the Bank of Italy to the delegation for tax reform, but perhaps not to the most relevant ones. The hearing attracted the attention of observers for the rejection of the “flat tax”, indicated as a point of arrival even if not immediate by the government. “A single rate system together with a reduction in the tax burden – said the head of the Tax Assistance and Advice Service, James Ricotti – might be unrealistic for a country with a large welfare system, especially in light of public finance constraints”. In short, the flat tax – especially at a low level as proposed by the right -, in addition to redistributive problems, in a country like Italy with high public spending and high public debt it is “unrealistic”. The criticism of the Bank of Italy is definitely a blow to the propaganda of the Meloni governmentbut also demonstrates why this is not the real problem of the tax reform: with a budget constraint that imposes ever more substantial primary surpluses and therefore credible and structural coverage (no tax cuts in deficit), the flat tax will simply never happen.