Home » Alarm from Confesercenti, inflation will burn 10 billion in 3 years: goodbye cut in the tax wedge

Alarm from Confesercenti, inflation will burn 10 billion in 3 years: goodbye cut in the tax wedge

by admin
Alarm from Confesercenti, inflation will burn 10 billion in 3 years: goodbye cut in the tax wedge

“The inflation rate will remain above +2% until 2025, eroding household spending capacity, slowing down the recovery in consumption and weakening the positive effects of the expected tax relief”, warns Confesercenti. The impact of inflation on purchasing power “affects the growth of consumption and could effectively weaken any benefits of the forthcoming tax reform. In fact, the era of low inflation – the analysis underlines – now seems completely finished. Even if the peak of 2022 appears episodic and determined by external factors such as the energy shock, in perspective we will return to experiencing permanently higher inflation than that with which we were accustomed to live. In fact, we expect – Confesercenti estimates – a rate of increase in the price index of +5.7% in the current year, of +3.8% in 2024 and of +2.8% in 2025. Only in 2026 should it settle at +2%, the threshold commonly considered as a target for price stability. An arrival point, however, quadruple compared to the average inflation rate of +0.5% recorded in the four-year period 2016-2019, before the pandemic. It is “One scenario that will have important consequences on the purchasing power of households: also considering the loss already accrued in 2022, the compression suffered by household spending capacity would amount, on average for 2022-2025, to 16% of disposable income. To have a term of comparison, consider that in the four-year period 2016-2019, the erosion of purchasing power caused by inflation had averaged 1.5%”. The inflationary impact “is also slowing down the recovery of pre-pandemic consumption levels, which under current conditions cannot be completed before 2025. And the goal of recovering the levels prior to the international financial crisis is also increasingly distant: if we take the value of real consumption in 2007 as a reference, 18 billion will still be missing at the end of 2025. This is because, again due to high inflation, consumption will increase in cumulative terms by just 2.1% in the three-year period 2023-2025, i.e. by an unsatisfactory 0.7% per year”. scenario – Confesercenti therefore warns – “imposes a course adjustment also for the economic policy agenda, starting with the tax authorities. The need to safeguard the purchasing power of households in fact requires us to also pay attention to the phenomenon of fiscal drag, which it occurs when the nominal increase in income correlated to inflation automatically leads to the application of higher rates and therefore to an increase in the tax levy. A taste is being had with the cut in the tax wedge prepared by the government, which will in part be eroded by the tax authorities. It is therefore necessary to review the structure of the rates to cancel the negative effects of the fiscal drag, or there is the risk of weakening the impulse that the fiscal reform in preparation could produce, in conditions of price stability, on the spending capacity of families».

See also  Shot down ball? Of amateurs and from 12 dollars: shot down with missiles

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy