Who said that European funds cannot be used to reduce taxes?
There is concern about the real capacity that the government will have, in tandem with the bureaucratic structure, to manage the future (?) European funds. When and if they arrive, in fact, the money from the Recovery Fund will have to be spent, but the Byzantine character of our administration risks postponing their effective use to the Greek Kalends, aggravating an economic situation that is already very dramatic in itself.
What to do then? We still have time to change the pattern, indeed to overturn it completely. Instead of relying on administrative and bureaucratic rituals from which there is very little to expect in terms of speed and efficiency, why not give European funds an "automatic outlet"? The proposal is simple: to allocate most of these financial resources to the reduction of taxes on consumption and investments. But how, it will be said, to reduce taxes in a structural way with funds that by their nature are one-off ? The answer is simple: by making the tax cut also temporary, that is, limiting it, at least for now, to the period 2021-2022.
Knowing that the lowest rates (or the highest deductions on investments, you make it) are "at maturity", the incentive effect would be multiplied, giving a considerable boost to the economy. If at the end of the two-year period we discover that the cut has paid off, generating no less but more revenue, it could be made permanent. To do this, it would be enough to change a small number on a law passed by Parliament, without the need to rely on any bureaucracy.
And if we also wanted to act on the supply side, we could allocate part of the aforementioned funds to clean up bank bad debts, effectively making the New Mes unnecessary. Two, actually three birds with one stone. As for conditionalities, i.e. the need to allocate funds to green projects, digital innovation, etc., it would not be difficult at all to design tax reliefs in such a way as to make them compatible with these parameters, which are very generic.
So, what are we waiting for? If you want to rock the economy, this is the way.
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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/chi-ha-detto-che-i-fondi-europei-non-si-possono-usare-per-ridurre-le-tasse/ on Fri, 04 Dec 2020 05:00:00 +0000.