In 2023, Italian taxpayers loyal to the tax authorities suffered a real tax pressure of 47.4 percent: almost 5 points more than the official figure, which last year stood at 42.5 percent. This is what the CGIA Research Office says.
Why this difference?
Our GDP, like that of many other European Union countries, also includes the effects of the unobserved economy whose contribution to the state coffers is by definition zero. Therefore, in light of the fact that the tax burden is given by the ratio between tax revenues and GDP, if we remove the component attributable to the underground economy from the latter, the tax burden on honest taxpayers inevitably rises, giving us a burden real tax rate for 2023 of 47.4 percent. This is a level 4.9 points higher than the official one which, however, stood at 42.5 percent.
Less taxes but few have noticed
In 2023 the tax levy finally decreased: compared to the previous year, the tax burden decreased by 0.2 percentage points, thanks to the remodulation of the Irpef rates and brackets and the modest increase in GDP. Similarly, the overall weight of taxes and contributions on the wealth produced in the country should also fall in 2024. However, it is plausible to believe that the majority of Italians, unfortunately, have not noticed this, since at the same time, the cost of bills, the TARI, healthcare tickets, motorway tolls, postal services, transport, etc. In short, if taxes have decreased, the weight of tariffs has instead increased, creating a distorting effect. In summary, taxpayers have not been able to fully benefit from the reduction in tax pressure because, in the meantime, tariffs have increased which, unlike taxes, are statistically not included among the items that make up tax revenue.
This is why the tax burden is 47.4%
In 2021 (latest data available) the unobserved economy amounted to 192 billion euros (equal to 11.7 percent of the national added value), of which 173.8 billion were attributable to the underground economy and another 18.2 to illegal activities. In the data reported in this news, the CGIA Research Office hypothesized, prudentially, that the impact of the underground economy and illegal activities on the GDP in the two-year period 2022-2023 has not undergone any change compared to the 2021 data.
Mef’s calculations
Reiterating that the official fiscal pressure is given by the ratio between tax revenues and GDP, if we separate from the country’s wealth the share attributable to the unobserved economy which does not contribute revenue to the state coffers, the gross domestic product decreases (therefore yes reduces the value of the denominator), increasing the result that emerges from the relationship between tax revenue and GDP. However, the CGIA Research Office would like to point out that the official tax pressure also calculated by the Ministry of Economy and Finance (in 2023 at 42.5 percent) faithfully respects the methodological provisions established by Eurostat.
Estimates on tax evasion
In recent days, the report on the black economy and tax and social security evasion in Italy was updated. Ministry data estimates the tax gap in the country at 83.6 billion. Although the loss of revenue compared to previous years is decreasing, the type of tax most subject to evasion in Italy remains the Irpef of self-employed workers, for an amount equal to 30 billion euros which corresponds to a propensity for the gap in the tax of 67.2 percent. This means that, according to Mef technicians, self-employed workers pay only a third of the Irpef that they theoretically should pay to the treasury.
Without going into the merits of the calculation methodology used which, in our opinion, appears somewhat questionable, we limit ourselves to demonstrating the “unreliability” of this result through some simple considerations. According to the tax returns of self-employed workers in simplified accounting in the North (practically artisans and traders), in the 2021 tax year they declared an average of 33 thousand euros gross. We point out that over 70 percent of these VAT numbers are made up of the sole owner of the company (in other words he works alone). Well. If, as the Mef claims, these activities evade just over 67 percent of the Irpef, how much would they have to declare if they were respectful of the treasury’s requests? 115 percent more, i.e. just over 73 thousand euros per year. Now, how can they “reach” such a high income threshold in reality if the vast majority work alone, therefore they are little more than an employee, and at most they can work 10 hours a day, not to mention that during this time band must also deal with customers, with suppliers, with other companies, with the accountant, with the bank, with the insurance company and like all ordinary mortals, can he get injured, get sick, take holidays, etc., etc.?
The tax evasion estimate does not include the “minimums”
Obviously, no one can hide the fact that even among self-employed workers there are pockets of tax evasion that must absolutely be combated. However, the estimates developed by the MEF are not convincing, also in light of the fact that the analysis does not include the tax gap attributable to self-employed workers excluded from paying IRAP. That is to say those who have chosen the “minimum” tax regime, a good part of agricultural businesses, professionals without independent organization and the domestic services sector. Overall we are talking about well over half of the self-employed workers present in our country (around 2.5 million). Well, if the evasion of the latter was also considered, what peak would the evasion of the so-called people of VAT numbers reach? It therefore seems clear that the data presented by the Mef in recent days are not very “reliable”.