Fiscal Reforms during Fiscal Consolidation: The Case of Italy
AbstractWe discuss the strengths and weaknesses of the fiscal consolidation package adopted by Italy in 2011. Estimated at 3.3% of GDP, the tax measures were introduced to reduce public deficits without weakening the prospects of economic recovery or producing adverse redistributive outcomes. The tax reform mainly increases consumption and property taxes and gives relief for firms that recapitalize or hire young workers and women. To some extent, these measures are consistent with scholarly suggestions to foster short- and long-term economic growth by shifting the tax burden from capital and labor income towards consumption and property. Using microsimulation models, we evaluate the distributional and growth effects of the tax package. The indirect and property tax reforms are highly regressive, while the reform as a whole makes limited resources available for growth-enhancing policies, through a reduction in the effective corporate tax burden. We propose a revenue-neutral alternative reform that allows channeling more fiscal resources towards corporate tax relief, while at the same time producing less regressive distributional effects.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 68 (2012)
Issue (Month): 4 (December)
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Other versions of this item:
- Giampaolo Arachi & Valeria Bucci & Ernesto Longobardi & Paolo Panteghini & Maria Laura Parisi & Simone Pellegrino & Alberto Zanardi, 2012. "Fiscal Reforms during Fiscal Consolidation: The Case of Italy," CESifo Working Paper Series 3753, CESifo Group Munich.
- Giampaolo Arachi & Valeria Bucci & Ernesto Longobardi & Paolo Panteghini & Maria Laura Parisi & Simone Pellegrino & Alberto Zanardi, 2012. "Fiscal Reforms during Fiscal Consolidation: The Case of Italy," Working papers 002, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
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