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Sunday, September 25, 2022

Taxes, the election manifestos compared:

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It’s a race to see who promises more. Detailed proposals to explain who and how pay the least tax. Completely absent or smoky when it would be necessary to explain the costs of the individual measures and especially how they are financed. In short, there is no answer to the question “who pays?” for the astonishing electoral promises in the tax field. This is the main problem encountered in the programs that the various parties or alliances have already presented or are preparing for the September 25 vote. It is interesting to see how some directions emerge transversally: from the measures to encourage the hiring of young people and women to the reduction of the tax on work – a sign that it is considered by everyone to be too high – even if the centre-right seems to prefer self-employed persons and VAT numbers (flat tax), in the sense that it would emanate from them, while centre-left employees (tax wedge).

The centre-right flat tax

The flat tax, or single tax rate, is at the heart of the center-right’s tax proposals. Until a few days ago, every political force expressed it differently. Subsequently, in the joint program signed by the Brothers of Italy, Lega, Forza Italia and Noi moderati, an agreement was reached, necessarily more generic. It is proposed to raise the ceiling on the current flat tax (15% for VAT numbers with income up to 65 thousand euros) to 100 thousand euros. Further, we speak of an “incremental flat tax”: that is, the application of the flat tax to the “increase in income compared to previous years, with the prospect of further expansion for families and businesses ». For example, if you declare 50 thousand euros against the 40 thousand stated earlier, you will not pay the normal personal income tax (in this case 35%) but the flat tax on the 10 thousand euros. This reform would apply “in perspective” to all taxpayers. The “phased introduction of the family quotient” is also envisaged.

The other proposals are:: a new “balance and extract” on the assessment notices; measures for companies under the banner of “the more hired, the less paid”; “Single Tax Account” to settle public administration credits and debts; VAT reduction on energy goods, basic needs and for children; tax reduction on the welfare of companies; tax cuts on the recruitment of women, young people and the disabled; “Protecting Existing Situations” about building bonuses.

The wedge of the center left

In the center left there is no common program to date. The Democratic Party focuses on lowering income taxes on middle-income earners. Central to this is the proposal to increase net salaries “up to a month more”, with the introduction of a deductible of one thousand euros on the INPS premiums to be paid by employees (with no consequences for the pension). A subsidized tax is also proposed for the second earner of the family, to facilitate women’s work. For young people: total payment of permanent recruitment of under 35 years and a dowry of 10 thousand euros, at the age of 18 and based on the Isee, for expenses related to housing, education and starting a job. The dowry is financed by increasing the inheritance and gift tax by more than 5 million euros. It is suggested for companies to bypass IRAP and remodel IRES.

For craftsmen, SMEs and professionals, the monthly self-settlement of taxes is considered instead of the down payment. On the “green” fiscal side: review and stabilization of incentives for energy and seismic regeneration of buildings and extension of the “Transition 4.0” plan to green investments; the introduction of a tax bonus for companies with a high ESG (environmental, social and governance) rating; over there gradual reduction of environmentally harmful subsidies. At the forefront of the fight against tax evasion: improving payment traceability.

The tax cut of the center

Action by Carlo Calenda and Italia viva by Matteo Renzi have announced that they will present their joint program on Thursday. On the fiscal side, the starting positions are very close to each other. Action proposes to shift the tax from work to digital transactions, by cutting the IRAP and IRPEF on middle-low incomes by 2 points of GDP (36 billion). In addition, young people up to 25 years old should pay zero tax and those between 26 and 30 years half, according to Calenda’s party. Which also proposes to strengthen the single allowance for dependent children, wanted alive by Italy’s minister Elena Bonetti. Renzi’s party also wants to overcome the IRAP for companies, as foreseen in the draft tax reform bill of which Luigi Marattin, economist of the living Italy, is the rapporteur. One of the proposals is also the reduction of IRES for the first 5 years for the merging companies, in order to stimulate their growth.

The Italia viva program is completed by: the VAT reform on two rates plus an exemption margin for basic necessities; the revision of the personal income tax to three rates with a maximum deduction that decreases as income increases and the possibility to pay the same tax with the mobile phone, in order to an increasingly digitized tax authorities. To finance the reforms, Italia viva proposes, among other things, to abolish citizenship income for those who can work.

The cashback of the 5 Stars

Super bonus and cashback are the two fiscal creatures of the 5 stars in this legislature, which wants to strengthen what remains of the movement, now led by Giuseppe Conte, in the next.The Superbonus is the 110% subsidy on energy efficiency and earthquake safety of buildings. According to current regulations, the tax discount is until December 31, 2022 for interventions carried out by private individuals on single-family homes, provided that works have been carried out for at least 30% on September 30, 2022. Longer terms are provided for IACP and condominiums. The 5 Stars want to make the Superbonus and the tax credit transfer mechanism structuralwidely used with building bonuses.

Cashback, created to facilitate credit and debit card payments and then suppressed, is being re-imagined by the Movement with a novelty: the “introduction of a mechanism that allows immediate credit to the current account of deductible expenses incurred with electronic instruments”. For example, 19% of the costs for medicines would be refunded directly to the account at the time of purchase at the pharmacy with an ATM or credit card.

Among the other proposals of the 5 Stars: the cancellation of the IRAP; “Cutting the tax wedge for companies and employees”, to increase the net wage bill; “Maxirating tax assessments”.

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Source: Corriere

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