Mikhail Maslennikov is an Oxfam policy adviser and author of their report “Inequality knows no crisis,” presented at the Davos Forum. We spoke with him about the social crisis in Italy.
In Italy 5% of the population has more wealth than the poorest 80%. Do you know whether the Meloni government will do anything to correct this situation, perhaps using fiscal leverage?
Unfortunately, we do not expect interventions that would strengthen the redistributive function of the tax lever and restore the equity of taxation. Such orientations are not in the DNA of this kind of a majority. We should not be under any illusions.
Different kinds of majorities have not expressed a desire for greater tax justice either. How do you explain that?
The many successive governments have turned our tax system into an à la carte tax system. Their interventions have favored exemption from taxation for certain types of income or introduced favorable flat tax regimes for them, such as those on rental income, financial income or self-employment income. They created differential treatment for taxation among taxpayers in the same economic condition but with incomes of different nature. The Meloni government is barreling forward on this path, expanding the flat tax regime for VAT returns, which is likely to become the natural regime for three-quarters of professionals and sole proprietors.
What would be needed instead?
An overall redistribution of tax burdens among the different tax bases by shifting taxation from labor to profits, interest and rents. But unfortunately, we don’t see even a hint of a debate on these issues. Instead, the suggestion that taxes must go down for everyone and that it’s unacceptable for them to go up for some people is prevalent. For example, for those 5 percent of higher income earners who already pay a lower total effective tax rate than lower income taxpayers.
Why did the government incentivize opportunistic behavior with 12 tax amnesties contained in the budget law?
These are measures that debase tax correctness, exacerbate moral hazard behavior among taxpayers and negatively impact the willingness to comply. These measures were justified with the need to support citizens struggling to make the payments. But there has been no analysis of objective hardship profiles for those in debt to the Treasury. Instead, we would need a robust fight against tax evasion starting with voluntary evasion with consent. To do this, we would first need to strengthen the tax risk analysis and control activities of the Internal Revenue Service, with full use of the data flowing into the tax registry information system.
Wages are collapsing, poverty is growing. Regardless, the government will cut the “citizenship income” for 660,000 “employable” people in 2023. For 2024, it has announced a “reform.” What effect will these decisions have?
What is certain is that for four months, from August to December, Italy will not have a universal anti-poverty measure. From January to July, the government is betting that the “employable” will be able to move to employed status with retraining paths and approaches towards the labor market. But this is very unlikely to happen for singles, childless couples or people with low qualifications who live in regions with low labor demand. And these are the profiles of the “employables” whom the government wants to cut off.
What is the philosophy that inspires Meloni and her government?
It says that the able-bodied poor do not deserve public support. It goes back to a categorical definition of poverty, underestimating the socioeconomic context in which the poor are embedded. And the inefficiency or shortcomings of public policies such as active labor or reconciliation policies are overlooked. It is an approach that comes in the wake of the long resistance against interpreting income as a right and favoring universalistic measures that provide protections to all as long as they are in need.
What’s more, Meloni has ruled out the establishment of a minimum wage and has reintroduced vouchers.
Her government’s interventions and intentions are a very poor band aid for combating poor labor, which is widespread in Italy. The legal minimum wage is an important tool for ensuring adequate minimum wages. But the government opposes this, invoking the dangers of rising unemployment and loss of competitiveness for Italian companies. Such theories are belied by modern socio-economic research. Instead of making atypical work more costly, the government is pushing on with further liberalization of vouchers and more flexibilization measures. These are measures that have helped polarize our labor market by expanding the segment of workers trapped in the precariousness of involuntary part-time and short-term contracts with low pay and protections. In Spain, with a progressive government, they are doing the opposite.