Is Italy a country of poor people or of tax evaders? Report
Is Italy a country of poor people? Here is what the study center "Social security itineraries" answers in the report of the Observatory on public expenditure and revenues 2021
Is Italy a country of poor people? This question is posed by the study center " Social security itineraries " which, in collaboration with CIDA (Italian Confederation of Executives and High Professionals), has drawn up the Observatory on public spending and revenues 2021 . The publication offers an analysis of individual personal income tax returns, corporate tax returns relating to IRAP, direct and indirect taxes. The goal is to understand the actual socio-economic situation of the country and to verify the sustainability of the Italian social protection system which in 2019 cost 241.018 billion euro only for health, social assistance and welfare of local authorities.
What is the IRPEF for
IRPEF is the main tax used to support a substantial part of welfare expenditure : health and social assistance which have no purpose contributions but also for a part of the welfare and management costs of local authorities. IRPEF also helps to redistribute resources because there is no direct correspondence between welfare services offered and financing.
The numbers of personal income tax in Italy
According to the data of the Observatory, the total income produced in 2019 and declared for IRPEF purposes through the 770, Unico and 730 models amounts to 884.484 billion euros, slightly more than the 879.957 of 2018 . The increase is modest, only 0.51%, "despite the excellent annuity which recorded an all-time record for employment rates and an increase even lower than inflation, which was equal to 0.60%", the report reads. The cause, according to the study center, is to be found in wrong tax policies that incentivize under-declarations.
The Italian income situation
In 2019, out of 59,816,673 citizens residing in Italy, the reporting taxpayers are 41,525,982, the paying taxpayers, that is, those who pay at least 1 euro of IRPEF, are 31,160,957. If only 31.161 million citizens out of 59.817 million inhabitants have a positive tax return for 2019, it means that 52% of Italians have no income and therefore live dependent on someone . The percentage is significant even if in a very slight decrease, -0.46%, compared to 2018 and "atypical for a G7 country".
All the numbers of Italian taxpayers
The Observatory of the Study Center then goes into more detail on the profile and numbers of registrants. The citizens who declare a zero income are 951,223 and do not pay personal income tax. Citizens who declare incomes of up to 7,500 euros gross per year are decreasing, they are 9,098,369, they represent 21.91% of the total and pay an average of 31 euros of personal income tax per year. Taxpayers who declare incomes between 7,500 and 15,000 euros gross a year are 8,090,485, the average annual IRPEF paid per taxpayer is 454 euros . The taxpayers of the first two income brackets, therefore, are 18,140,077, of which 6,134 million are pensioners, and pay only 2.31% of the entire IRPEF, ie 3.986 billion. Between 15,000 and 20,000 euros of gross declared income there are 5,553 million taxpayers. These taxpayers pay an average annual tax of 1,934 euros. In the income bracket from 20,001 to 29,000 euros we find 9,038,967 paying taxpayers, equal to 21.77% of the total taxpayers, who pay an average annual tax of 3,724 euros and pay a total of 19.82% of taxes. Between 29,001 and 35,000 euros there are 3,303,701 paying taxpayers, who pay an average annual tax of 6,676 euros equal to 12.78% of taxes.
The tax burden on the middle and upper middle class
The report continues with the analysis of income and IRPEF financing of the middle and upper middle classes. Taxpayers with gross incomes above € 100,000 are only 1.21%, equal to 501,846 taxpayers who pay 19.56% of IRPEF . If we add to these the holders of gross incomes from 55,000 to 100 thousand euros (which are 1,421,036 and pay 3.42% of IRPEF) and incomes from 35,000 to 55 thousand euros gross, it turns out that 13.22% of taxpayers pay 58.86% of all IRPEF. Between 200 and 300 thousand euros of income we find 0.14% of taxpayers who pay 3.01% of IRPEF , while only 0.1 of the paying taxpayers declares more than 300 thousand euros and pays 6.02% IRPEF. From the data of the Observatory it emerges that "holders of incomes up to 29 thousand euros are 78.82 of Italians and pay 28.36% of the entire IRPEF, insufficient, to pay for the first three welfare functions (health, assistance social and education) ".
Italy, a country of the poor or of tax evaders?
“These are the data on which to reflect when discussing the reform of the tax system – explained Prof. Alberto Brambilla, President of the Studies and Research Center for Social Security Itineraries -. It is right to help those in need but our political decision-makers tend to overlook how these percentages also depend to a large extent on the shadow economy and tax evasion, for which we excel in Europe ”. The gap between the classes of taxpayers is destined to worsen in the years to come as a result of the measures that increase the amount and number of recipients of bonuses and other incentives to support income. “It would be enough to look at the declarant / inhabitants ratio alone (equal to 1.44) to ask oneself a few questions: it is really credible that more than 50% of Italians live with less than 10 thousand euros gross a year – asks prof. Brambilla -? These numbers describe us as the poor country that in truth we are not: a photograph not worthy of a G7 state and easily denied by the data on consumption or on the possession of goods such as smartphones or cars ".
Proposals for a richer and fairer tax
The report of Social Security Itineraries and CIDA is not limited only to providing a snapshot of the Italian situation but also tries to make some proposals. A fair and efficient tax reform must aim, first of all, to reduce massive tax evasion, increase revenue and simplify the rules of the game and tax reporting. The drafters of the report first propose to reduce the benefits and bonuses linked to income by replacing them with the "taking charge" of the so-called weak subjects through a national assistance database. Secondly, they strongly advise against the institution of the flat tax "which in a country like ours with" high tax infidelity "is a powerful" engine "for undeclared production". The third proposal suggests increasing the VAT and reducing the IRPEF brackets "leaving the no tax area at the current little over 8 thousand euros but for a limited time period beyond which the Tax Agency would intervene to verify what the so modest declarant lives on and, if necessary, include him in a social recovery path, if he is not a pensioner ". Finally, it could be possible to authorize the Revenue Agency to verify the reasons why a person who is 30 or more years old has never filed a tax return and to introduce cross-checks between owners of luxury goods , cars, houses and so on, incompatible with the declared income.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/litalia-e-un-paese-di-poveri-o-di-evasori-report/ on Sat, 20 Nov 2021 07:26:42 +0000.