Italy's Budget Law


On December 30th, the Italian parliament finally approved the long awaited Budget Plan, in which the State approves the expenses and the revenues for the following year. The budget law is one of the most (if not the most) important acts of every government because without it, the State is not granted permission to levy taxes or use money from its citizens.


The government and the whole political apparatus pushed for the budget approval in order to avoid the Esercizio Provvisorio, i.e. a temporary regime in which the State can use public money only for ordinary administration (paying wages, pensions and small expenses). The reasons behind this choice were two: the Esercizio Provvisorio is now rather disused and, most importantly, it would generate even more uncertainty on the markets.


Thanks to the use of the Voto di Fiducia (Vote of Confidence, which ties the approval of a law to the destiny of the executive), the budget plan has been approved at the Senate the 23th of December and on the Camera on the 30th, even though it is not exactly clear what is inside the whole act. As the opposition parties highlighted, the whole iterof the budget plan has been messy since the beginning. After the deal between Italy and the European Commission, in which the former agreed to have a deficit of 2.04 % (lower than the 2.40% proposed by Italian government in the first days of December), the Italian Government needed to review its draft in order to meet EU requirements. A series of modifications and adjustments were made and formalized in the so-called Maxi-Emendamento (Maxi-Amendment).


Now, the problem is not the Maxi-Emendamento per se: it is normal and healthy to review the work after external critiques or confrontation, but the almost ridiculous time management of the whole thing: the final document was redacted in just a few days.


Moreover, what is even worse, is that deadlines were so incumbent that the Maxi-Emendamento could not have been (seriously) examined by the Italian budget Commission, and it has been de factodirectly submitted to the Parliament’ votes. Lastly, the document approbation was paired with the aforementioned Voto di Fiducia, leaving the Parliament with no real choice but to accept the decision.

Figure 1: The opposition parties protesting during the vote of the 23th of December.

However, the most disturbing aspect of the whole story is not the precise content of the budget plan, on which we can agree or disagree, but how the role of institutions has been emptied in such a simple and direct way. Democracies are founded on an articulate system of checks and balances, which are paramount to the correct functioning of any government (and complex organism, in general). Forcing the vote on proposals that have not been carefully examined is not only sloppy but also dangerous: avoiding the correct procedure of approbation is an act of disregard (if not disrespect) for our forms of democracy.


Lastly, there is another frightening issue: not knowing what is actually being voted on; and it wasn’t brought up as an issue by opposition parties (more focused on the anti-democratic drifts). Certain aspects of the amendment were not event relevant to the public debate (such as the reduced VAT on soy milk), while other acts that no one asked for can be approved without being noticed. The most striking example is the IRES question: for non-profit organizations, the “main” tax (IRES, which is the tax on societies’ incomes) was raised from 12 to 24%. This measure is expected to yield roughly 150 million in the first year, but it is blatant that it would seriously threaten the financial survivability of many NGOs, whose philanthropic focus should be aided, not hindered, by the state.


Is it possible to take a decision on such a delicate theme without a proper debate? Is it “normal” that citizens come to know it without any preventive message? Is this level of ignorance (in the broad sense) really sustainable?

 

WRITTEN BY MICHELE T SICILIANO FOR BESA

PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT

#Italy #BudgetLaw #BudgetPlan #EuropeanCommission

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