Tax gold pensions, lower the cash payment cap and transfer tax from business to assets. These are some of the recommendations for Italy offered by the OECD in its “Economic Survey Italia 2024” report presented today. The report predicts that growth will be 0.7% in 2023 and 2024 and 1.2% in 2025. “We read that the economy has overcome the recent crises well, but growth is now slowing down due to tightening financial conditions.” How do we start again? According to the OECD, it is necessary to “shift taxes from labor to property and inheritance while ensuring that income is maintained or increased.” The document emphasizes that “shifting taxes from labor to inheritance and property will make the tax mix more conducive to growth.”
The OECD also calls for “updating tax base calculations to take into account distributional impacts” and “continuing to combat tax evasion, including by continuing to encourage the use of digital payments and lowering the cap on cash payments.” Eliminate “expensive” tax expenses that have no economic or distributional justification, for example, by limiting the scope of the dependent spouse deduction.
All of this happens in light of the fact that labor taxes as a share of total income are higher than in comparable OECD economies, while VAT revenue and inheritance taxes are lower, the document says. The reason for this is that “a significant portion of revenues are lost due to tax evasion”, while the income tax base is eroded by costly deductions-deductions. Moreover, for the OECD “it is also possible to reduce the erosion of the tax base by reducing tax expenditure and limiting the spread of special flat tax regimes”.
“More taxes on high pensions”
The organization then explains that it should also intervene in Italy’s social security system. The premise here is that “it is necessary to save on public expenditure” and that pensions in this context represent a significant share of general expenditure. According to the OECD, some reforms are therefore necessary, including “the phasing out of early retirement schemes”. Partial de-indexing of high pensions should be continued in the short term, but in the medium term a tax on high pensions should be introduced instead. not related to previous pension contributions”.
“This solidarity contribution,” the organization writes, “can be sustained until the relative income of retirees reaches the same level as the OECD average.”
“The participation of young people and women in the labor market is low”
Another critical aspect that needs to be addressed is business. Not only by lowering taxes, but also by involving those who are currently unemployed or underemployed. “Youth and women’s labor market participation remains among the lowest in the OECD region,” it explains. “Young people’s prospects in the labor market can be improved by strengthening Higher Institutes of Technology (Academy); women’s participation in the labor market can also be strengthened by significantly expanding the scope of early childhood care services and further increasing incentives for paternity leave”.
Uncommon electric vehicles: “We need more charging stations”
Among the many topics covered in the report, there is no shortage of sustainable mobility. In Italy we read: “The level of diffusion of electric vehicles is low and a large part of the subsidies for their purchase are unused. The use of electric vehicles – it is observed – can be encouraged by increasing the proliferation of charging stations, making the stations available to the public, subsidies for the purchase of vehicles with internal combustion engines.” phasing out and refocusing support for the purchase of entry-level electric car models, as well as aligning sales, registration and ownership taxes on cars at the level of emissions produced”.
The organization also notes that there are too many cars in Italy, mostly old cars. “The car ownership rate per capita is the second highest in the EU, and most of them are old and highly polluting,” it highlights. So, among the key recommendations we read “offer financial incentives for scrapping old cars regardless of the purchase of new ones. Continue strengthening public transport and regional rail networks.”
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
