Superbonus: what will happen now?

The Minister of Economy Giancarlo Giorgetti, with the Decree-Law n.11 of 16 February 2023, on the one hand admits the circulation of existing tax credits, clarifying by law the boundaries of joint liability on the part of the transferees, but on the the other deletes the most innovative and useful aspect in a crisis situation: the discount on the invoice and the transfer of tax credits for all tax bonuses, obviously starting with the superbonus.

Especially with regard to this last change, Giorgetti declared at the press conference: " It is clearly a measure of impact, which is necessary to … block the effects of a wicked policy … and which has also and certainly produced a benefit for some citizens, but which in the end placed each of us, each Italian, from the cradle, so to speak … 2000 euros each, this is the balance of this experience ” . https://www.youtube.com/watch?v=1mm1jRlIX7E

Ok for the "original sin" and the "public debt" that weigh on all of us at birth, but adding 2000 euros in the cradle due to the super bonus doesn't convince us. For the minister, the jobs generated by the bonuses would only have resulted in benefits for some citizens and an enormous cost for the state and the entire community.

And where did the increased tax revenue go?

The final data on the Superbonus have amply demonstrated that the future loss of revenue from all tax bonuses has obviously also generated an increase in revenue today , which reaches the State from taxes, VAT and contributions paid on:

– invoices issued by those who do the work for 120 billion euros and on non-subsidized works carried out in any case;

– invoices issued by suppliers and salaries paid to employees;

– invoices and salaries on all the indirect and induced economy generated.

Nomisma has calculated that for 38.7 billion euros of tax credits granted, a direct, indirect and induced economy was generated, equal to 124.8 billion euros, on which we now pay taxes, VAT and contributions much higher than the future revenue reduction.

Comparing with the total amount of all the bonuses, equal to around 110 billion euros, the direct, indirect and induced economy generated would be equal to 354 billion euros, on which we certainly pay much higher taxes, VAT and contributions today future revenue reduction.

Don't the sure benefits of today count against the presumed future costs?

Now the government is canceling transferability tout court, despite Eurostat having introduced into the rules the concrete possibility of using a tax credit that can be transferred to everyone infinitely, which can be carried forward in subsequent years, without expiry, and which can be used to offset any debt owed to the State. He only asks to consider it an expense the first year, which we know is a purely accounting fact because it is not a debt to the State and does not affect Maastricht's debt. In short, Europe is not asking us for it.

This was also clearly reiterated by Luca Ascoli, Director of Eurostat's public finance statistics, during the hearing in the Finance Commission of the Chamber of Deputies on February 14, 2023 which you can find HERE : “ There has been no impact on the debt so far , nor will there be, if things stay that way, … the impact on the long-term government deficit is exactly the same whether the tax credit is payable or unpayable. What changes is simply the moment in which there will be an impact, not the final amount of the cost of the measure ”.

What will be the consequences of this decision?

Firstly , there will be a long chain of bankruptcies and new jobless people that will be generated, and this will not only produce a reduction in GDP and tax revenues today and in the coming years, but will also have a further indirect and induced recessionary effect, in other sectors more or less related to construction.

Secondly , all households and businesses that were planning an intervention with tax bonuses, but which do not have sufficient guaranteed fiscal capacity in the coming years, will block any project started, slowing down the already weak economic growth.

Thirdly , all subjects, banks and financial institutions, but also regions and other tax-capable subjects, who at this moment were organizing themselves to acquire tax credits using the current rules, but also hoping for a some release promised by the Government, they will stop, worsening the situation of companies with blocked credits.

However, all these consequences will produce lower revenues and far greater costs for the State and the community, far greater than the presumed savings of this measure.

Are we not facing what John Maynard Keynes called the " parody of an accountant's nightmare "?

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The Superbonus article: what will happen now? comes from Economic Scenarios .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/superbonus-cosa-succedera-adesso/ on Sun, 19 Feb 2023 18:34:55 +0000.