The first in a series of discussion documents, these articles are designed to help direction-less, leaderless, Italy find workable, practical, solutions to its many problems.
Italy desperately needs direction – and if everyone works together, this can be achieved and Italy can become the envy of the world.
These documents will, I hope, evolve and grow over time and I’d be very happy for Italians, if they wish, to help out by translating them into Italian so other Italians can contribute ideas too. The translated versions will be published on a separate website.
Comments on the manifesto can be made in either Italian or English.
Think of this exercise as a kind of manifesto for Italy, an online, virtual think tank. Forget about the problems – come up with solutions!
Let’s start with a few ideas for tax reform and then take a look at solutions to help businesses in Italy grow and prosper.
Taxation
Broadly reform and simplify the tax system.
Here are some suggestions:
- Make the payment of taxes easier – for example, by increasing retained tax for the self-employed – but
- Make tax refunds faster – over-payments to be refunded every six months, automatically.
- No advance tax payments for the self-employed or for businesses established for less than 5 years.
- Closure of businesses to be monitored to avoid incidences of fraudulent bankruptcy.
- Make “Chinese boxes”, as they are known in Italian – dummy corporations in English – illegal.
- Reward good taxpayers – give them reductions or relief for paying taxes for over 5 years. Further reduction for paying taxes over 10 and 20 years for individuals and businesses.
- Stigmatise tax evasion. Introduce three strikes and out rule for business owners – if caught evading taxes more than three times, they will be forced to sell their businesses which, in the meantime, will be turned over to “angel managers” who are over 50.
Angel managers = Over 50 year olds who are out of work but who were successful director-level managers or ex-business owners.
Property Taxes
- Increase IMU property tax – higher rate for second and other homes, and for businesses. At the same time, reduce income and business taxes.
IMU tax is hard to evade, so monitoring costs are likely to be much lower than keeping an eye on the accounts of 1000s of businesses.
- Reduce IMU for the over 65s and those without jobs – but charge full rate for anyone with a pension exceeding €30,000 a year
IVA – VAT
- Introduce, or rather, raise the VAT threshold – only make VAT registration obligatory for individuals with income over €75,000.
- Reasonable business expenses to be tax deductible. Commission set up to establish and review business expenses, and then define guidelines for businesses in different sectors.
This would encourage more start ups.
Taxation for Business
Businesses in Italy can find themselves overwhelmed by taxes – too many, and plenty are unnecessary and could be combined into one or two taxes instead of hundreds.
Here are some ideas to render Italy more fiscally friendly to business:
- Lower taxes for business in line with increase in tax revenue obtained via crackdown on tax evasion.
- Oblige all businesses to settle invoices for less than €10,000 within 30 days. Non payment incurs automatic statutory interest. For contracts worth more €10,000 – 60 day payment period – along with statutory interest for late payment.
- Gradually introduce standardised electronic invoices linked to business bank accounts and tax authorities. Tax could be deducted once payment has arrived. Invoicing system could be tied into online bank accounts. Could also be integrated with VAT system.
- Provide tax relief to businesses which employ more than 100 persons full time.
- Provide tax breaks to businesses which increase the number of full-time employees by over 50 in one year.
- Instigate a think-tank to consider introduction of ‘raw materials’ tax. Such a, hard to evade, tax would replace in part or in total corporate taxes. Businesses would not be permitted to raise prices beyond level of inflation for first 3 years after tax adopted.
Business
- Amended:
Abolish Article 18Consider abolishing Article 18 if reduction in bureaucracy and taxes plus increase in availability of credit does not have desired effect. If Art. 18 abolished, minimum salary bands should be introduced – market rate plus 30% – for short term contracts – if employee taken on more than three times under temporary contract arrangement, employment becomes permanent.
- Allow for lower minimum salary levels for full time employees – if Art. 18 repealed.
- Set up informal fast-track Employment courts to resolve employee-employer disputes.
- Oblige banks to give overdrafts to businesses established for less than 5 years.
- Monitor businesses in different sectors to understand real income and real costs. Adjust tax levels accordingly and inspect businesses with income under and over certain thresholds.
Lower than expected income indicates tax evasion. Higher than expected income may indicate money laundering.
- Set up Investment Bonds system. These bonds would be used to finance research, training, new businesses and businesses seeking to expand.
Feel free to add other suggestions via comments below. The best ones will be added.
Yes we can sort out Italy! And, hopefully, we can prevent Italians from voting selfish rogues like Silvio Berlusconi into power ever again.
Joe T. says
The notion that Italy is particularly or endemically a lot more “corrupt” than other countries is one that I think has to be questioned a bit. I think it results at least in part from the pervasive “Mafia” stereotype. I don’t mean to imply that no corruption exists in Italy. I’m saying corruption isn’t Italy’s number one problem. Mismanagement, perhaps, but not corruption. As an Italian friend of pointed out, Italy is actually no more corrupt than Japan, South Korea, Taiwan, etc. — yet all those countries have much better performing economies than Italy.
As for appointment of unqualified officials to key positions, one only has to look at this gentleman, Michael D. Brown, appointed by former President George W. Bush to head the Federal Emergency Management Administration (FEMA), a large federal agency which handles disaster response. Mr. Brown, or “Brownie” as Bush called him, was in charge of FEMA during the Hurricane Katrina disaster in 2005.
http://en.wikipedia.org/wiki/Michael_D._Brown
Mr. Brown’s qualifications regarding disaster management, prior to his appointment? NONE.
Brown was a big political contributor to Bush’s presidential campaign. Prior to being made FEMA administrator, Brown was the Judges and Stewards Commissioner for the International Arabian Horse Association, (IAHA), from 1989-2001. To quote Wikipedia: “After numerous lawsuits were filed against the organization over disciplinary actions that Brown took against members violating the Association’s code of ethics, Brown resigned and negotiated a buy-out of his contract.”
The notion that Italy is peculiarly rife with a certain sort of cronyism is, I think, bunk and derives from a stereotype. Let it be known that in the grandest democracy of them all (as many would call the US), the same type of quid pro quo and insider dealings exists… Hey, we invented the phrase “good ol’ boys”!
Alex Roe says
Hi Joe,
Alas, Italy is horrendously corrupt and laws do not really punish the corrupt, so they continue to corrupt and this is holding back Italy’s economy. You should come and work in Italy for a few years – if you can find a job that is.
Yes, I know other nations engage the incompetent, but Italian politics is riddled with the inept – people who have no idea what to do.
As for cronyism, Italy is rife with it and this too means the incompetent end up in positions where they just make a mess. The newbies in Italy’s parliament will tell you lots of stories of jobs being dished out to unsuitable candidates simply because they are friends or family.
Economic and social data indicate Italy is in hot water – but it does not have people will the skills to remove it from the cauldron which may well overflow very soon, and scald Europe and beyond, as this article illustrates: Italy on the Brink
Everyone agrees that Italy needs major, far reaching reforms – but it isn’t getting them and this is worrying everyone.
Best,
Alex.
From the continent says
The structure of the State is similar in Italy to that of France. Same invasive bureaucracy and omnipresence of the State in every aspect of everyday life, yet in France things work much better. The difference between the two countries lies in the selection of the ruling class. We have to create the italian correspondent of the ENA “ecole nationale d’administration ” and “Polytechnique”. This is the only way to have our enlightened “casta”, a sort of SAS version for civil servants. The new would be “big shot” should start their “cursus honorum” very young maybe by succeeding in making efficient a neglected small museum or a bankrupt transport company of a small town. The rewards should be very high wages and a fast lane in achieving high ranks within the public administration, the penalty a minimum of 5 years jail also for a pencil stolen. All this may sound elitist and radical for italian standards but it is well known that the fish stinks from the head down.
Alex Roe says
Yes, France is much better at admin than Italy! And less corrupt too. But, as you say, France trains and selects its leaders quite carefully and likes to have people with a track record – not in Italy! It is no big surprise Italy never gets better – does not know how to!
I do also agree that competent people with a record of success should be paid well and, if caught stealing as much as a pencil, should be slung in prison. This helps create respect for institutions and authority. In Italy, institutions demand respect simply because they are what they are, not because of what they do.
Ha! “the fish stinks from the head down” – you’d think Italians would have understood this by now! Very, very slow learners – though some have simply stopped voting and have given up all hope. Others simply leave Italy. The leadership of Italy is so totally dire, it’s beyond a joke.
Thanks for your comments,
Alex
Francesca Maggi says
Unfortunately, internet-based isn’t democracy at all … or at least as of yet.
1) In Italy, over 50% of the population are over 60 years old (or something like that). Most of these people are not computer-savvy – while almost everyone has a phone, well…
and
2) I’m still wholly unconvinced – esp in USA where they’ve tried it – that these computer programs would not be riddled with graft & corruption…All it takes is a few pay-offs and you’re elected.
Alex Roe says
I think I’d agree with you on the web democracy front – it’s a very new area and e-voting is still far from glitch free from what I’ve read on the subject – though I’ve only read about problems and not successes.
E-voting systems need to be tested and probed for security vulnerabilities and to ensure operators cannot fiddle the systems. This will not be easy in Italy which has a propensity for fiddling and corruption.
Re Italy’s over 60s and computer literacy in general, I agree – both major problems and not solutions as yet. Local authorities could set up reading rooms for the old and less computer savvy.
For the moment, non-e democracy is the best path for Italy, maybe – unless Italy wants to be a pioneer.
Cheers,
Alex
kevinffittonitton says
Great little debate starting here, lets hope we can draw in more contributors though.
As far as libertarianism goes, I am in favour of many libertarian ideals ( I believe that tax is theft, for example ), but that’s outside the scope of this debate atm; lets move in the right direction before getting too revolutionary.
Two very valid points raised by Francesca. i would expect that if the population could understand and appreciate the advantages of fully participatory democracy ( and it is the older citizens who currently turn out and vote most assiduously ) , there would be a big incentive and desire for them to teach themselves how to do it, or seek help and training.
Secondly, the current existence of the Bitcoin peer-network payment system, which is ( to date ) fully secure, encrypted, and by it’s peer sharing nature, impossible to corrupt ( as the Bitcoin files are automatically stored on so many machines connected to the internet ) shows that internet systems can be operated securely.
Alex Roe says
Yes, it has sparked some discussion – though more contributors would be good, I admit. This is also why I’d like it to be put into Italian.
As for the “tax is theft” thing, yes, we’ll leave that one out for now!
Re online voting systems, once Italy is connected and finds a way to connect, virtually or otherwise, it’s citizens, online voting can be considered. And yes, it can work, as the Bitcoin thing seems to prove. As far as I know, the system has not been hacked. Italy will adopt online democracy systems, but certainly will not be a pioneer in the field!
Alex
kevin fitton says
The internet is a means to communicate the will of the people, and would facilitate real devolution of power to citizens, and shrinkage of government waste and bureaucracy. This is real radical stuff.
1. Top to bottom change in political system. Abolishment of all political parties and attendant clientism. Online voting for individual candidates. All candidates have funding limits, and reduced stipends. Candidates have term limits, so no career politicians. Like in Switzerland, recall procedure for poor performers. This will tend to attract and elect candidates with real world experience and success, who wish to serve their countries for a short period of time, rather than milk the system.
2. Roll back government, based on the principle that people should be responsible for themselves and their families, rather than expecting the state to provide for them. It’s called the free-market, rather than socialism/collectivism, and the Italians have traditionally believed in this ( hence strong familial ties, regionalism and a relatively undeveloped welfarist system compared to many EU countries.
As government rules, functions and waste are reduced, the natural entrepreneurism of the Italians can resume.
3. Sound money, so get out of the current farce of the unsustainable and corrupt transfer-payment, clientist, something-for-nothing, unaccountable and centralist EU and Euro currency. A private central bank, fractional reserve lending leading to ridiculous multiples of leveraged derivatives, banks using clients’ savings to gamble, yet too-big-to-fail, misreporting and fraudulent valuation of loans and assets must all be reformed and prevented for the future.
Point 3 will lead to a major collapse of the financial system ( can’t say exactly when, but it wont be around in 10 years ) due to financial corruption, fraud and promises of social handouts which cannot mathematically be paid, FACT. Then, points 1 and 2 will not only mean that Italy ( along with the rest of the EU and USA ) will run headlong into collapse of their current systems, but will not have the robust social and political systems to either avert this impending disaster, or when it hits, be able to react effectively without a great deal of pain, anger, destruction and death.
Sorry to be so direct and pessimistic, but we have all been ignoring truth for too long, living the easy life and kicking the can down the road for too long. Time is running out.
Alex Roe says
Interesting ideas, Kevin – most valid. Some incorporated into Section Two here: https://italychronicles.com/how-to-solve-italy-problems-section-two/
Personally, I do not think the ‘free market’ is the way to go – and current situation does seem to indicate this to be the case.
As for internet based democracy, I wholly agree – provided it is supported by 100% access to the internet and to sources of information which allow citizens to make informed choices.
Keep the ideas coming.
Thanks,
Alex
kevinfitton says
On the concept of a free-market. We have never experienced a free market; the current situation is akin to fascism ( as Mussolini defined, the joining of the state and corporations ) where insiders get awarded government contracts, influence lawmakers, bribery and kickbacks are in evidence, banks are free to privatise profits and socialise losses, as they are ‘too big to fail ‘, and the current legal and administrative system favours established mega-corporations and the establishment over innovators, stifling possible competition to the status-quo, and we all recognise the huge number of regulations, laws, permits, inspections, record-keeping and bureaucracy which continue to grow are the antithesis to the free market, so implicitly you are arguing for a freer market in your earlier post, with the simplification of the tax system. At the end of the day, the ‘free market’ is just the sum total of citizens carrying-out their free will in demanding goods and services, and carrying out free trade; transactions that benefit all parties, without coercion or market distortion ( as far as possible )
Alex Roe says
Ah, OK, now I understand what you are getting at, Kevin – the absence of a free market in Italy – not the neo-liberalism concept which is what I had in mind.
True, Italy’s market is not free at all and what you say is right on the money too. The influence of lawmakers is far to high, and the MPS can of worms, which is being hushed up, is a classic example.
I’ll build remedies to these situations into future sections of this “manifesto’, some of which I have already drafted.
Thanks and keep the comments coming!
Best,
Alex
Francesca Maggi says
Love It!
But, I still believe that Italy’s President first & foremost needs to dissolve Parliament.
And then, invite only half back.
Institute the Obamametro – Are you making more than the leader of the Free World? And you were a dental hygienist or had no cv prior to joining (any) govt position? Then great. You will make the salary of a post ofc clerk.
FMaggi, Author
Burnt by the Tuscan Sun
Alex Roe says
Thanks, Francesca – more to follow.
The Berlusconi saga may end up with parliament fizzling out anyway. But much of the same old trash will be back to blight Italy, I suspect.
I’ll be writing something about how Italy selects its politicians soon enough and keeping bimbos out will be part of it.
And yes, salaries should be much lower – got a few ideas on that front too – PRP for politicos.
Best,
Alex