The 2027 Budget: the healthcare sector’s stretched resources and the taboo of a wealth tax to fund the National Health Service

In the text of the 2027 budget bill, which has been passed by both Houses of Parliament amidst significant concerns regarding the National Health Service, none of the requests made by the regional presidents regarding public healthcare have been accepted to date – neither the call for an increase in funding of around 7–8 billion – nor the request for an additional 5.5 billion euros initially put forward by the Minister for Health, Orazio Schillaci. The increase in absolute terms compared with 2026 (2.4 billion) does not even cover inflation (now at 5.4 per cent), let alone the healthcare costs associated with the rising average age of the population.

For many years now, there have been calls for a reduction in the IRAP tax payable by National Health Service (SSN) bodies, which amounts to approximately 3.5–4 billion for the sector. This tax constitutes an absurd circular transaction for all public bodies – one which, moreover, entails enormous administrative costs – and amounts to 8.5 per cent of employees’ salaries; it has never been reduced since 1997, the year it was introduced. There have occasionally been changes to the rate, either to increase the burden on certain sectors (such as the banking sector at present) or to reduce it for others, but the burden on the National Health Service has never been eased.

Article 53 of the Constitution states: “Everyone is required to contribute to public expenditure in proportion to their ability to pay. The tax system is based on the principle of progressivity”. However, progressivity is present only – albeit in brackets – with a maximum rate of 43 per cent for incomes exceeding €55,000 (in the text now approved) for income from employment and pensions, and in a few other cases for income of a different nature. The majority of income – not only that from self-employment, but above all that of a financial or property nature – is taxed at fixed rates (flat tax or flat-rate withholding tax) ranging from 1 per cent to 27 per cent. In practice, the Constitution is not only ignored by the legislature, but actually serves as the basis for rules that are entirely at odds with it.
Our tax system is keeping professors of Public Finance awake at night, as they struggle to help their students grasp the core principles of a discipline that, until a few years ago, had inspired every piece of legislation. Now, the ad hoc and fanciful measures in every budget bill alter the old framework, without fairness for citizens and without any guiding principle; even comparison with the systems of other countries has become impossible.

Tax schemes with fixed rates do not allow for any deductions from income, except in the case of self-employment subject to a flat tax, for which the deduction is a lump sum. Consequently, beneficiaries have no incentive to request invoices for the costs (goods and services) they incur and thus evade VAT. And their suppliers, who do not issue invoices in order to maintain a balance between costs and revenue, are led to refrain from requesting invoices for their own costs. And so one instance of evasion triggers others, creating a cascade effect.

Recently, with regard to the ability to pay, the opposition has begun to moot the idea of a tax on large fortunes. In fact, the major parties have expressed opposition or reservations, whilst others are proposing a tax – the details of which remain undefined – that would apply only to fortunes exceeding 5 million. The author believes that, given the emergence of ‘monstrous inequalities’ – as a well-known university rector put it a few days ago – a wealth tax can no longer be considered taboo. One solution could be to exclude financial assets from the calculation of wealth (both because they are already subject to a tax, albeit a small one, and because they can easily be hidden from the tax authorities), limiting the tax to property assets and making use of existing databases for the administration of the IMU property tax. We could get started quickly, with a tax-free allowance that is not too high and with rates that increase in brackets. At the same time, the reform of the land registry should be accelerated in order to eliminate the distortions that currently exist. The revenue generated could help stabilise the funding for the National Health Service by adjusting the rates according to need.