All the difficulties in preparing the budget manoeuvre
The difficult "art" of preparing the state budget. The comment by Salvatore Sfrecola, magistrate of the Court of Auditors
For days, and it will certainly be the catchphrase of the coming weeks, the subject of the state budget for the financial year 2024 has been taking center stage, in relation to which the coverage of some expenses that the government has undertaken to support above all to come meeting the most vulnerable sections of the population. And public accounts "experts" are mushrooming (there are never so many aspiring football coaches!) who present solutions, often imaginative, to find resources in a spending budget that has always been highly "rigid", in the sense that the sums already they have a destination that is difficult to change in terms of finalization and amount. This situation which, moreover, the Government of Giorgia Meloni inherits from the previous executives must not dissuade interventions which in some way make it possible to find the resources for new expenses.
In particular, it should be considered that the financial statements contain assets (revenue) and liability (expenses) items, the forecasts of which can in any case be modified because, during the financial year, revenue may vary as they are mainly sums that correspond to taxes forecasts may have been conservatively contained at times. As, for example, in the case of excise duties on fuel which often cause higher sums to flow into the budget than those envisaged. In any case, revenues, especially those deriving from indirect taxes, such as VAT, vary in relation to the amount of consumption. This tax has always been important because it affects the wealth consumed and lends itself, through the variation of the rates, to meeting the needs of the most disadvantaged classes by reducing the tax on basic necessities or on the tariffs of important services, such as transport. More useful than providing with disbursements of money which, when subject to taxation, reduce the benefit that recipients expect from public intervention.
From another point of view, the items in the income statement offer us an important representation of the state of the national economy because if more than 80% of taxes are paid by employees and pensioners, if the number of workers decreases, the inflow of income is reduced. Equally for VAT, any decrease in consumption is a dangerous sign. Because lower consumption means a contraction in production with stagnation if not a reduction in jobs. Therefore, it is necessary to carefully evaluate all the economic policy operations that have an effect on revenue items.
Turning to public spending which, as I said, is "rigid", in the sense that it is difficult to compress, it is necessary for the political class to assume an awareness that it often seems to me it does not have. Through the public budget, the State, together with other public, local and institutional bodies, is the largest and most important economic operator in the country. All together they contribute, through the purchase of goods and services, to the performance of important sectors of the economy, especially in some areas of the country. In fact, the State buys everything, from pencils to real estate for its offices, to naval and air units needed by the Armed Forces, just to name a few easily perceived examples. But also services, such as IT services. This means that there are many companies that live thanks to public procurement. A reality that parliamentarians from the North do not always seem aware of, where many of the companies that sell goods and services to the state, regions and municipalities are located. Some, it must be said, are not strictly necessary but fundamental for some companies. It is the reason for the failure of spending review policies. The margins are slim and politics does not want to give up certain contiguities with the productive world, so governments are having a hard time reducing some expenses. For example in the IT sector. Every ministry, every public office has its own service provider, which is difficult to understand from the point of view of costs and efficiency of services, because every time a citizen has to consult the Internet site of a public administration he finds himself having to interpret just different language than the administration next door.
Examples just to say that preparing and managing the state budget is a complex work that cannot be seen as a sort of match between the State General Accounting Office and the individual ministers, once a year on the occasion of the updating of the Economy and Finance (DEF).
Remaining on the theme of expenditure, the revision of commitments is a permanent work which involves, day after day, the revision of the expenditure laws and of the programs in place, trying to reconcile the reasons of the companies supplying goods and services with the complexity of the needs of the State which they do not only concern the functioning of the PA but also social policy.
In short, the management of public finances is a complex activity that cannot be entrusted to improvisation, to clumsy maneuvers without an overview, the one suggested by the very word budget.
Article published on unsognoitaliano.it
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutte-le-difficolta-nel-confezionare-la-manovra-di-bilancio/ on Sun, 27 Aug 2023 05:19:58 +0000.