Tax delegation: 29 decrees approved, but the VAT, IRAP and state-run gambling dossiers remain unresolved

‘It’s Alfredo’s fault,’ sang Vasco Rossi in the early 1980s. In the case of the tax delegation, there is no one to blame. On the contrary, the reform championed and defended by Deputy Minister for the Economy Maurizio Leo has resulted in 21 implementing decrees and 8 consolidated texts. A total of 29 decrees that have been brought to their final conclusion with a very clear objective from the outset: not to place a burden on the public finances. This is also why Deputy Minister Leo has repeated like a mantra on every occasion that all the changes could only be made with the necessary resources. And the lack of these resources – given that almost the entire implementation process drew on the funds made available by the abolition of the ACE (economic growth aid) scheme – has left some work unfinished. In theory, in some cases there may still be some scope to intervene with corrective decrees, which may extend beyond the initial implementation deadline set for 29 August, whilst in others any such interventions will necessarily fall outside the scope of the delegated powers. More generally, the most glaring examples of unfinished projects are those relating to VAT, IRAP, land-based gambling and the taxation of financial income.

Given the sheer scale of the figures involved, the task of making substantial changes to VAT and IRAP has proved to be a difficult mountain to climb. With regard to VAT, incidentally, the tax delegation had set the objective of ‘rationalising the number and levels of VAT rates in accordance with the criteria laid down by European Union legislation’. This was with a view to achieving a gradual harmonisation of the treatment of similar goods and services eligible for relief, as they are intended to meet needs of greater social importance. With regard to IRAP, the mandate aimed to phase out the tax gradually, giving priority to partnerships and unincorporated associations formed between natural persons for the joint practice of arts and professions, and to introduce a surtax. All of this, however, was subject to a very specific condition: the ‘invariance of the tax burden, ensuring that the regions receive revenue equivalent to the current level, to be allocated amongst them on the basis of the criteria in force’.

The other major omission is the review of the taxation of financial income. Here, the approach outlined in the enabling act was to provide for a single income category in the interests of comprehensiveness and, amongst other things, taxation on a cash basis with the possibility of offsetting, ‘encompassing, in addition to losses arising from the liquidation of companies and entities and from any relationship involving the investment of capital, the associated costs and charges, in line with the objective of limiting opportunities for tax avoidance and erosion’. Here too, the difficulty of securing the necessary resources to support this reform programme was a major factor. Moreover, the Deputy Minister for the Economy has repeatedly emphasised the importance of issues such as the harmonisation of the tax treatment of property and securities funds and the reduction from 26 per cent to 20 per cent of the tax on returns from investments held by professional pension funds.

The reform of the state-run gambling sector has stalled halfway. Following the rewriting of the rules for online gambling, all attempts to bring order to land-based gambling in coordination with the regions and local authorities have foundered. And here, politics has ‘played’ a key role. The Ministry of Economy and Finance (MEF), for its part, had already secured the go-ahead from the Unified Conference for the draft reform decree and, through the Budget Law, had set aside a fund of 80 million to be allocated to regions and local authorities as the first tangible sign of the devolution of a share of gambling revenue to regional governors and mayors. However, two weeks ago, this allocation was reclaimed by MEF officials and redirected instead towards the implementation of the mandate on fiscal federalism. Now operators, and concessionaires in particular, are all looking to the next budget, when the government will effectively be obliged to grant yet another extension to the concessions for bingo, betting and slot machines. But without a comprehensive reform regarding the distances between gaming venues and sensitive locations (schools, hospitals, care homes, etc.), opening hours and greater protection for players, the risk of triggering new and protracted legal disputes with local authorities is very real. The result is that it is only illegal gambling that is gaining ever more market share, to the detriment of player protection, the industry and the state’s own revenue.