Thursday, October 28

Salvini breaks the fiscal reform with Draghi


Correspondent in Rome

Updated:

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The resounding failure of the populists and sovereignists in the municipal elections held last Sunday and Monday, has made the leader of the League unearth the hatchet, Matteo Salvini, big loser in local elections. To cover his electoral failure, Salvini broke up on tax reform with the prime minister, Mario Draghi, which in practice he has called a “liar”, something that does not correspond to reality. Unexpectedly, the ministers of the League that are part of the unity government did not appear at the Council of Ministers on Tuesday afternoon. At the Executive meeting, the bill on tax reform was approved, the implementation of which will begin in the coming months based on these bases: reduction of the tax burden on companies and citizens, a simplification of the tax system -obsolete because it designed 50 years – and a new cadastre. Every time the government approves a decree-law on these matters, it must request the authorization of Parliament.

The justification that Salvini gave for the absence of his ministers in the Council was this: «What I asked Draghi was the commitment not to increase taxes on anyone. I fear that is not so. In reality, the prime minister has said actively and passively that he will not increase taxes “because at this time money is given and not taken away.”

Salvini’s political weakness

Matteo Salvini is criticized for playing with one foot in the government and the other outside, for the electoral rivalry that he maintains with his ally from the center right, Brothers of Italy, led by Giorgia Meloni, the only political force in the opposition. In the polls, both parties are tied with 20% in voting intention, although some polls are led by Brothers of Italy and in fact their result in the municipal elections has been better than that of the League.

In relation to the tax reform, Matteo Salvini’s fear is that with the land registry reform, which will come into effect in 2026, the tax on the house will be raised. For almost six years now, the European Union and the OECD have asked Italy to adjust declared property value to the market. Now the reform is essential to receive the money from the European Fund. Mario Draghi explained after the council of ministers that this reform to update the cadastre does not entail a rise in taxes: “No one will pay more or less, the taxpayer will not notice anything.”

The League is not expected to consummate its break with Draghi and exit government. No one would understand that Salvini once again swerved in his erratic policy (from the 34% he obtained in the European elections in 2019, his fall has been steep) to cause a government crisis. But the step he has taken has been described as “a very serious fact” by Enrico Letta, leader of the Democratic Party: «There is an obvious link between the electoral disaster of the League and its attempt to break up. Salvini said things of great gravity about the prime minister, considering him a liar. Salvini is a problem for Italy. His gesture is very serious and irresponsible. The tax reform is essential to receive the money from the Recovery Fund, “Letta told various Italian media.

The tax reform

Salvini’s break with Draghi over tax reform did not faze the prime minister. The Council of Ministers approved the bill because Mario Draghi considers that it is lived an emergency situation. He believes that one must act with the same intensity displayed in the vaccination campaign to carry out a series of reforms. They are essential because they are required by the European Union so that Italy can receive more than 200,000 million euros from the Recovery Fund.

At a press conference, Mario Draghi and his Minister of Economy, Daniele Franco, explained the four principles that guide the fiscal reform: 1. To relaunch economic growth through a greater efficiency of the tax structure and the reduction of taxes on production factors; 2. Rationalization and simplification of the tax system through the reduction of obligations and the elimination of micro taxes; 3. The progressivity of the tax system is preserved following the dictates of the Constitution, which recall a general principle of justice and equity; 4. Fight against tax evasion and avoidance. Various estimates agree that in Italy tax evasion exceeds 100,000 million euros.

With the coolness and serenity shown by Draghi at the press conference, he showed that he is not willing to pay the bill for the great electoral failure of the League and that he will continue with the reforms.

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