Silvio Berlusconi has been all over the media this morning with a game-changer in the Italian general elections. The People of Liberty party undertakes as its first act to abolish taxes on our main residence and to repay the tax we have all had to cough up under the Monti administration.
The reinstatement of the rates, which had been abolished by the ousted Berlusconi administration, was one of the first actions of the Monti government in 2011. The justification was the desperate need to staunch not the debt but the rate at which it was rising and the consequent collapse of international confidence that was making it cost more by the minute. Not for nothing is Prime Minister Monti greatly disliked as a tax-raising scourge of the evaders and avoiders. It's very hard to get out of the rates.
The tax has been a disaster. It has caused blatant defiance - always something to avoid between the state and its citizens - in refusal to pay, refusal for all sorts of wholly forseeable reasons that cluster under the heading 'we haven't the money'. Apart from bankrupting families and small businesses it is regressive; even the European Union declared it unfair. You can't slap the rates onto a country without warning, onto every family in the country when their budgets are creaking under the cruelties of recession.
Worse, the justifications were false. 'See, the spread is falling' they cried. The spread was falling in Spain too and they weren't being clobbered with this particular purgatory. 'You can't let the evaders get away with it and they can't evade this one' they preened. The tax burden is as high as it is in Italy because the culture of discreet tax 'management' shall we say is widespread and wholly accepted. People have been ruined unnecessarily by inappropriate cultural game-shifts from the playbook of the politics of envy playing to a nasty progressive audience.
Angels have had 5000 euros a year confiscated. The People of Liberty Party are offering to stop that and give us our money back. Every householder in the country is considering the offer.
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One of the best arguments I've come up with against the perfectly reasonable Georgist case for taxes based on property is the two-parter (i) when?, and (ii) how on earth do you manage the transition?
How has the local authority raised revenue before rates? And can you give any no-name specific examples of people being ruined by the introduction of them?
But where will he get the money from?
By borrowing?
That worked well before, didn't it!
You know not what you ask, S. 'Rates' is the nearest English term to cover a multitude of property taxes centrally levied and locally gathered and set, with the take shared between the centre and the locality. We have an accountant to sort us out. Not because of immense and complex wealth; everyone has an acountant in Italy, it's too difficult otherwise and the fines hurt if we get it wrong.
There is a good description of IMU and ICI and their recent history and how they are calculated in The Florentine, in English.
Bankrupting of local businesses by IMU, which is levied on all property, productive or no, as well as on the first house is widely reported. You can imagine in a recession and at a time of continuing rapid economic development, paying taxes on redundant buildings and/or marginal land doesn't help investment and growth.
As for specific instances, we have been required to pay taxes on wholly abandoned and derelict farm buildings. But just try and knock such houses down - the Belle Arte would be there for many of them in a trice.
Small businesses currently shutdown in the recession are being taxed on their premises. As many are family business the effect is devastating on family wealth and removes the potential to re-open when the economy starts to recover. To top it all off there are reports of usurious interest rates being charged locally by the banks as families try to keep the productive potential of their business alive. IMU is the last straw.
Very destructive, creating cliffs in an economy, Dearieme, as you say.
If there's 4 billion for the Monte dei Paschi, Yacht, we have a better and economically more progressive claim. Ask Ed Balls. He's progressive and Klugmanite.
Sounds nightmarishly complicated, HG. Ideally a tax system should be so simple that no-one needs and accountant.
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