Four and a half million Italians live in absolute poverty despite an intricate welfare system. The Italian tax system has impeded the Italian economy from achieving its full potential, says Istutito Bruno Leoni (IBL) – an Atlas Network partner organization based in Torino, Italy – which has put forth an ambitious reform proposal, “Twenty-five for all,” that has made major waves in the country (translated from Italian).
Serena Sileoni, vice-director general of IBL, discussed the embedded culture in Italy of looking to government to provide services that the private realm could provide more efficiently. She also spoke to Italians’ widespread dissatisfaction with current taxation level, noting the irony: “We cannot demand assistance and then complain for the level of taxation, which is about 43.5 percent of GDP (the EU average is 40 percent). [IBL] urges to decrease taxation – which is the main reason of subjection and, understandably, of complaint.”
IBL’s proposed reforms call for a flat 25 percent tax rate on major taxes such as personal and corporate income taxes and further calls for a repeal of regional taxes on gross receipts of businesses (the IRAP tax) and local real estate taxes (IMU taxes). Sileoni continued: “We need to decrease public spending and give a signal that three-fourths of private resources should stay where they originated. That’s why we propose a realistic flat tax at 25 percent, financed by a detailed spending cut.” IBL also suggests dismantling the patchwork of welfare benefits and entitlement programs currently on the books and introducing a cash subsidy for the most destitute who qualify and meet the requisite conditions.
“[Twenty-five percent] is a quarter of economic freedom: a threshold that is not only realistic from a financial point of view but also symbolic … But in exchange [for the cut] the state must do less, and spend less,” Sileoni expanded. “Does this mean cutting state welfare? Not precisely. This means cutting red tape and arbitrariness in redistribution of private wealth. In our proposal, the flat tax goes together with a basic income. Needy people should be helped, but they should be allowed how to choose to use the public aid. Basic income, as a substitute of state welfare, is a more transparent, efficient, equal and anti-corruption tool than public assistance.”
This flat tax initiative hit the court of public opinion by storm, with daily coverage dedicated to the flat tax proposal in Italy’s financial daily, Il Sole 24. Coverage also appeared in Italy’s top newspaper, Corriere della Sera, which has fostered a debate over the merits of the flat tax and its transparency. Italy’s highest-profile politicians have responded to the proposed flat tax, with former prime minister Romano Prodi attacking it in Il Messaggero before Nicola Rossi (IBL’s former chairman and leader of the flat tax initiative) and Alberto Mingardi (director general of IBL) provided a rebuttal that was published the following day. Several TV and radio outlets have covered “Twenty-five for all” and a cluster of other publications have written about it, including Wall Street Italia, La Gazzetta del Mezzogiorno, La Repubblica, among many more (links in Italian).
“Media-wise, this is our greatest success ever – and most likely the most effective campaign ever run by a think tank in Europe,” said Mingardi. “The campaign's effectiveness is enhanced by a dedicated website which enables Italian taxpayers to see how much they would gain with a simpler tax system: how their personal ‘Tax Freedom Day’ would shift, and how much they would personally save.”
The fundamental objective behind IBL’s campaign was to establish a fairer and simpler structure of taxation and benefits, drawing up ambitious yet attainable objectives. IBL plans to capitalize on the campaign’s momentum in the fall with a series of events throughout the country to raise even more awareness about the benefits of its proposals and mount pressure on policymakers to act.
IBL has experienced increasing success in shaping the climate of opinion in Italy, doing so with its “training programs for young students, collaborations with universities, printing books, publishing in-house research, writing daily in newspapers, and so on,” explained Sileoni. “We work both on the side of deeply researching and of influencing public opinion. The latter activity is the shop window of the former. We are often invited on the most important radio and TV talk show[s], besides writing op-eds in the foremost national newspapers.”