Less tax if you want an invoice: “Meloni loves Germany”

A new era of reform is opening in Italy, where pensions and taxation are at the poles of the Meloni government’s roadmap. In March, Deputy Minister of Economy Vincenzo Leo will present a text that promises to revolutionize the entire Italian tax system, which has become so cumbersome 50 years after the last major reform. For now, there is talk of a possible “softening” of personal income tax rates, an extension of the flat tax, the family share and the fight against tax evasion by arrangement with creditors. Marco Cuchel, president of the National Association of Accountants (ANC), declared in an interview with Today that this is not enough: “To reduce tax evasion, we need to improve the relationship between taxpayers and public administration and re-initiate the conflict of interest. A reference country like Germany”.

Cuchel: “Tax officer should be honest and transparent, not friendly”

Cuchel stated that if tax evasion is to be reduced in Italy, it will first of all require “a general organic tax reform that can improve relations between taxpaying citizens and the public administration”. What does it mean for the tax officer to be “better” to taxpayers? The head of the ANC commented, “As we often hear, the tax officer should not be ‘friendly’, but should be honest and transparent with citizens.” The relationship between the parties should be “fair”, instead, “the tax officer always sets out from a dominant position. If the citizen makes a mistake, he cannot always think that he is in bad faith, it is necessary to consider that there may be mistakes.” Due to the complexity of the norm or the inability to fulfill it at certain times, the norms in our country are so schizophrenic and often contradictory that it is difficult to do business even for foreign investors who want to invest in Italy. “.

That’s what Deputy Minister Leo’s proposals for the possible repeal of fines for negligent payments and a review of the rules on misrepresentations might be. “If the mistake takes the form of a mere formality and there is no tax harm, there should be no penalty or it should be ridiculous,” Cuchel said. the sanction should be there but it should definitely be reviewed because the sanctions today are disproportionate to the mistake committed. As in the case of Italy, a high sanction system is not a deterrent for tax evasion”.

To combat tax evasion, it is necessary to magnify the conflict of interest: what is it?

The tax burden in Italy is really high: we are among the first OECD countries. To remedy the Meloni government, he would focus on “softening” the Irpef rates. But, according to Cuchel, “a more serious reflection on the conflict of interests must also be made”. About what? “If we introduce situations where the end consumer is interested in claiming invoices because they can be deducted on their tax return – we’ve seen this with building tax bonuses, for example – the tax base and therefore taxes rise. In this way, the entire economic system can be restarted”. Thanks to the construction premiums and deductions of 50%, 65%, 90% and 110%, the output in the construction sector has actually been high. The idea would be to extend these measures to other economic sectors as well. However, Cuchel pointed out that the 19% cut (after the exemption) for medical spending is “a very low percentage if I want to consider triggering a real conflict of interest”.

Conflict of interest is an effective system in the fight against tax evasion that works particularly well in Germany. In the country on the other side of the Alps, “there are higher tax rates than in Italy, but in the same situation a German taxpayer pays less tax than an Italian taxpayer because there is a greater possibility of deductible from our country. More emphasis has been placed on the principle of opposing interests in relation to lowering the rate, because if I lower the rate and remove the deductible, the tax burden of the citizens does not change”.

Two-year agreement with creditors

As for small and medium businesses and VAT figures, Deputy Secretary Leo appears to be considering a “two-year arrangement with creditors”, an agreement on taxes payable to avoid auditing. “It could be an advantageous system, especially for small businesses,” Cuchel said. There will be winners and some losers. It will have to be seen on a case-by-case basis. “tax deficit” or loss of revenue for the State “between 85 and 100 billion euros”.

The good side of this measure is, above all, about the possibility of protection from the control of the financial police, underlining the ANC president, “Today it is difficult to prove that the taxpayer acted correctly because unfortunately the burden of proof is borne by the taxpayer in taxation. With the tax system structured in Italy today, the opposite is true. Being able to prove it becomes a demonic proof”.

Flat tax for employees and retirees: “Not a good idea for everyone”

With the 2023 Budget Law, the Meloni government increased the flat tax from 15% to self-employment income up to 65 thousand euros, with the promise of realization for employees and retirees. “The substitution tax appears to be an advantage compared to the extremely low, progressive rate Irpef, but it must be analyzed on a case-by-case basis because the issue loses all deductible and deductible fees and risks as the average rate, paying more with ordinary taxation,” explains Cuchel.

This is already the case for self-employed and entrepreneurs. Use a 15% substitute tax when entering the business world and having no family burden or other significant expenses, but when his business and family begin to grow. It may not be cheaper. “Every taxpayer is a case for himself, both as an employee and a pensioner, as a self-employed person or as an entrepreneur. It is not easy to make a general statement for everyone. I think this substitution will serve as a driving force for the economy before we translate the tax into the working world and for retirees first. It would be better to go for tax reform that sees

It was also mentioned that the turnover threshold for the self-employed would be raised to 85,000 euros. According to Mestre Cgia, even with an upward shift in the threshold, the VAT figures will continue to pay more taxes from workers (only the income range between 60 and 65 thousand euros will be saved).

Tax: There is no horizontal equity in Italy

A flat tax of 15% on self-employment income of up to 85,000 euros and a possible two-year arrangement with creditors for small businesses would turn many employees and retirees on the sly. However, various studies have shown that an entrepreneur or self-employed worker (traders, freelancers, consultants, artisans and small entrepreneurs, etc.) pays more taxes than an employee, and he in turn pays more taxes than a retiree. “Horizontal equality does not exist in this country. We should also consider that there are different treatments: there are 13, 14 of the employees, severance pay is paid even if the company goes bankrupt, vacation, illness, dismissals if the company enters.” the crisis is a much higher pension because the employer pays part of the premiums. The treatments are completely different, the protections are completely different. Announcements. We must try not to fuel this struggle between categories”.

Cuchel later recalls that “there are no perfect taxpayers on either side” and that even employees and retirees “can evade tax by illegally taking a second job or accessing services or purchases without demanding an invoice.” This is escaping from reality.