Mark Mardell's Euroblog

How about a month off taxes?

• Mark Mardell
• 10 Apr 08, 08:23 AM

Italy’s economy is suffering, not so much from a credit crunch but a crisis of consumer confidence.

But could Silvio Berlusconi give it a big boost if he wins the weekend’s elections?

He’s told one of the newspapers he owns, Il Giornale, that there’s something very much he wants to do: give Italy a month off taxes.

He says it would be a “month of freedom”, without spelling out whether this is just income tax, or includes all of Italy’s many taxes from corporate tax, sales tax and tax on houses to tax to pay for the health service.

It’s perhaps not such a daft idea. Before I saw it, Carlo Secchi, Professor of Political Economics at the Bocconi University in Milan, was telling me that whoever gets into power needs to give the economy a psychological boost.

The credit crunch isn’t such a great problem as in other European countries or America but rates of growth are approaching zero, while food and energy prices have gone up and people are finding it more and more difficult to make ends meet after the third week of the month.

But he claims the outgoing government was being deliberately pessimistic so that taxes could be put up, but now what is needed is a burst of optimism to encourage spending.

Plus, a reason for that optimism: he muses that there must be some tax changes to take the pressure off people’s real incomes.

'Imagination'

So could freedom month be the answer? I guess we’ll never know. Mr Berlusconi confesses “we probably won’t be able to do it: it would cost too much”.

But he adds “it shows we don’t lack the imagination to solve the problems”.

I rather disagree. If you know you are not going to do it, why not be really bold? Propose a tax-free year, or indeed abolishing taxes altogether while doubling pensions.

But I suppose it is some advance to see politicians abandoning their plans in their next sentence rather than after election.

Professor Secchi, however, points towards another phenomenon - also noted by Vedrana Obucina - that the dolce vita isn’t dead.

“Psychological mood plays such an important part in Italy. While many people insist on the negative, how come when we have a long weekend the roads and the restaurants are full up?”

Perhaps they are among the many Italians who don’t pay their taxes, whether it's freedom month or not.

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