Superbonus, here’s what government and banks can do
Superbonus. “The government puts its hand on the wallet and at least allows the banks to offset the sums that customers will pay starting next March 16th. Even just for 20 billion out of 120, the next day the banks will go back to buying credits from companies and we will finally have put an end to this unedifying ballet". Giuseppe Liturri's analysis
Speaking of Superbonus and other construction subsidies, the statements released yesterday, after the first round of the table between the parties involved, are all in the direction of an opening by the government in favor of the solution that we hypothesized precisely in the Saturday article.
The Abi-Ance proposal which provides for the possibility for banks, which receive taxpayer payments via F24, to offset with the tax credits in their portfolio what they must then pay to the State.
In this way, the credits held by the banks would decrease and the latter would have room for further purchases from the construction companies swollen with tax credits for invoice discounts granted to those who carried out the works, but which cannot find buyers.
There is talk of around 19 billion of credits that banks could purchase in this way and, assuming they are payable in four annual installments, the impact on state coffers in 2023 should be around 4/5 billion.
But the road to achieving this goal still appears to be paved with obstacles. In fact, there is no coincidence of positions between the minister Giancarlo Giorgetti and the association that brings together the banks active in Italy (ABI). The latter – even after listening to what was declared by the general manager Giovanni Sabatini in a parliamentary hearing only on 14 February last – does not have any further tax debt capacity to offset and has blocked the purchases. And he claims that he can only go back to buying again through the methods just illustrated. Giorgetti, on the other hand, believes that banks still have the autonomous capacity to purchase credits that they can offset, without having to resort to offsetting the sums they collect from their respective customers.
In the light of these latest events, we reiterate and integrate the analysis already made in recent days.
It may be a politically legitimate position of the government that puts an end to the regime of transfer of credits from building bonuses for the future, even with the need to provide ad hoc measures for seismic craters and incompetent people and the need for a more comfortable transitional period to protect the legitimate expectations of those who had in any case started the process without having presented the notice of commencement of work (CILA).
In fact, a measure of this intensity was justified and was worthy of an economics textbook in May 2020, but it is no longer so after about 3 years. After a long time, the unsustainable imbalance between supply and demand and the resulting out-of-control prices outweigh the benefit to GDP growth and employment.
It is therefore understandable the stop to the transfers – which boost the turbo at the start of the works because they expand the number of beneficiaries, also including those who do not have tax debts to compensate and those who, despite having them, still do not have sufficient liquidity – and the start of a "regular" phase with lower concessions.
But it is for the past that government action is seriously lacking and reticent. The government is trying in every way to mitigate the impact of the bonuses already accrued on state coffers. With this blatantly betraying the legitimate expectations of taxpayers. First of all the famous "impact on public finance" so praised and feared in the government's declarations (Giorgia Meloni and Giancarlo Giorgetti in the lead), clamorously denied precisely by the intervention of the Eurostat representative in the parliamentary hearing and taken up by the dossier accompanying the parliamentary discussion of the Decree Law 11 of 16 February.
In this speech – commented here a few hours after the hearing – it was lucidly explained that the distinction between "payable" and "non-payable" tax credits has no impact on public debt (obviously in the sense that it is still debt, and not , as some jokers have concluded, which does not constitute debt). And it only affects the temporal distribution of the deficit – i.e. the annual difference between State revenues and expenditures – depending on whether everything is recognized in the year in which the credits accrue (if deemed "payable") or in the 4 or 5 years in which they will reduce the tax revenues (if deemed "unpayable").
The effect of this reasoning is that the reclassification of Superbonus credits from "non-payable" to "payable" should worsen the deficit of 2020, 2021 and 2022 and improve 2023, 2024, 2025, 2026, because they will be relieved from the annual quotas all anticipated to previous years.
So for the government it is legitimate, even if for someone not to agree, to appeal to public finance impacts to spend the 2023 budget differently; it is groundless to do so with reference to the past.
Similarly, it is incorrect to invoke the “ cost of 2,000 euros each ”. In fact, any measure of public expenditure weighs on state coffers and, ultimately, also on taxpayers. Even health care and education “ cost ”. It all depends on deciding which destination to spend and which return for citizens to prefer. And, above all, in correctly evaluating the expenditure in the estimate, so as not to find yourself with holes to fill up.
And there is no doubt that spending on building bonuses contributed to at least 1/5 of the growth rate recorded by GDP in 2021 and 2022.
But the fact that the government should not only – out of respect for the legitimate expectations of taxpayers – but be able to deal without problems with the payment of the 120 billion bonuses accrued so far is a conclusion we allow ourselves to reach on the basis of what was declared by Minister Giancarlo Giorgetti on 9 November 2022 in parliamentary hearing. More than three months ago. It was already all in the accounts and no one raised alarms. What has changed now?
It is worth quoting verbatim what is in the file:
As regards the "Superbonus 110%", it is necessary to make some considerations. With the update of the public finance trend forecasts, carried out during the preparation of the Update Note of the Economic and Financial Document, significant higher charges were assessed for some building bonuses envisaged by current legislation compared to what had been estimated at the time of adoption of concessions.
These higher charges contribute to defining the trend forecasts and the related public finance trend balances, illustrated in the previous Note and recently updated with the integrated Note sent to the Chambers. The increase, recorded on the basis of information updated to 1 September, signals an overall difference of 37.8 billion euro over the entire forecast period. In particular, for the years 2023-2026, the higher charges lead to a higher burden, with the consequent worsening of the forecast of direct taxes for amounts between 8 and 10 billion euros each year , which could jeopardize the adoption of other types of intervention. Furthermore, the estimate of the charges for the Superbonus 110% could undergo a further increase at the end of the year also considering the data as at 30 September published by ENEA".
So the biggest burdens are already all in public finance trends, both debt and deficit. Except that for the latter they are spread over several years because they are considered "unpayable" credits, based on the provisional classification of Eurostat. The strong restrictions on circulation, introduced by the Draghi government, are aimed precisely at not paying part of it. Too bad that if the state doesn't pay, businesses go bankrupt. The largest 38 billion credits are worth 8/10 billion a year of lower revenues. It's all already in the accounts and the numbers cited by Giorgetti in November were punctually repeated (almost to the letter) by an MEF executive in the parliamentary hearing on 2 February.
The bass drum that has begun to play in the last few weeks around the "hole" in the accounts therefore sounds totally instrumental. There is no "hole", or rather there was, but it has already been taken into account in the first Nadef of the Meloni government. And Eurostat's intervention, even if it considers the credits from building bonuses "payable", as seen, has little or no significance.
When, on the other hand, we look at the movements of the case, then things change a lot. Because the so-called "recourse to the market", i.e. the issue of securities to finance needs, is changing. And the behavior of the government is understood, but not justified, indeed blamed.
The transferability of credits increases the probability that the taxpayer will compensate them and therefore that they will constitute an effective lower revenue for the State and therefore higher issues of public securities, with an increase in the debt stock. This is why the Draghi government intervened as early as the end of 2021, blocking transferability without limits. Circulation is the tap that regulates the impact on state coffers. Eurostat also repeated it: the more it circulates, the more it becomes "payable". And the words make sense.
So, whatever (of little importance) Eurostat decides, the government will put its hand in the wallet and at least allow the banks to compensate the sums that customers will pay starting next 16 March. Even just for 20 billion out of 120, the next day the banks will go back to buying credits from companies and we will finally have put an end to this unedifying ballet.
4 or 5 billion more public debt for each of the next 4 years is a drop in the ocean. All the more if we consider that the approximately 9 billion allocated in the first quarter of 2023 to mitigate the impact of energy costs on businesses will be reduced by at least 40% thanks to the drop in gas prices. So, even on 2023, the money is there.
If it is true, as it is true, that the government has already budgeted the 120 billion, now you give up riding the Trojan horse consisting of blocking the circulation of credits. Due to which, at midnight of each New Year until 2026, taxpayers could find themselves with waste paper in their balance sheets.
Those incentives – albeit with obvious design and management flaws – have created development and employment. Now is the time to honor your commitments, without subterfuge.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/superbonus-crediti-governo-banche/ on Tue, 21 Feb 2023 19:10:20 +0000.