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POLITICS

Italy’s political parties have made big promises to voters, but do the numbers add up?

The major parties and coalitions contesting Italy's March 4th election have been making some big promises to voters, plenty of which have economists looking at the country's monstrous debt and scratching their heads.

Italy's political parties have made big promises to voters, but do the numbers add up?
People walk past a board with the parties' logos. Photo: Filippo Monteforte/AFP

How costly are these electoral promises? 

Former prime minister Matteo Renzi's Democratic Party (PD), which leads the centre-left coalition, has presented the lowest-cost manifesto of the election's big players, despite promising tax cuts for businesses and families.

The party estimates extra spending of 35 billion euros ($43 billion), roughly in line with analysis from the Sacred Heart Catholic University's Italian public accounts observatory (OCPI), which puts the cost of the PD's
pledges at 38.6 billion euros.

However, according to Roberto Perotti, an economist at the Bocconi University in Milan, the PD's promises would cost some 56.4 billion euros.

READ MORE: Italy's fragile economic recovery hangs on the election Ex-PM Renzi's dad investigated for 'influence trafficking'
Matteo Renzi, leader of the Democratic Party. Photo: Andreas Solaro/AFP

Meanwhile the Five Star Movement (M5S) — which is proposing a monthly basic income of 780 euros for those living in poverty — calculates its promises at 78.5 billion euros, but they are estimated at 103.4 billion by the OCPI and 108 billion by Perotti.

Those numbers rocket skywards for the right-wing coalition led by Silvio Berlusconi, which is pledging to abolish progressive taxation in favour of a flat rate.

The OCPI estimates costs of 136.2 billion euros, while Perotti offers a best case scenario of 171 billion and a worst case scenario of as much as 310 billion.

Why the escalation? 

“Election promises are of a different scale to the past,” says Perotti.

The populist League, formerly the Northern League, and the Five Star Movement have begun making grand promises in a bid to stand out from their traditional rivals.

“The other parties have had to adapt,” he added.


Matteo Salvini, leader of the League. Photo: AFP

Nicola Nobile from Oxford Economics speaks of “unrealistic or unhelpful” promises and believes that the country should instead pursue reforms that encourage growth rather than return to areas such as pensions where reform has already been carried out.

“Not enough progress has been made on the removal of tax and regulatory disincentives, the improvement of public administration, infrastructure or the judicial system,” he says.

What about the flat tax? 

One of the right's flagship promises is to institute a “flat tax” in place of the current progressive system.

Berlusconi's Forza Italia (Go Italy) is proposing a flat rate of 23 percent, while his far-right partners the League has lowered the bar further to 15 percent.

The League also proposes a tax exemption of 3,000 euros per individual in each household, including children, before the flat tax is applied, while Forza Italia is pledging to exempt 12,000 euros per working adult.

Forza Italia politician Renato Brunetta says that the idea is to cause a “fiscal shock that will enable the country to escape the trap it's stuck in”, and increase growth levels to “more than three percent” from the current rate of 1.5 percent.

READ ALSO: Inside a campaign event with Berlusconi's supporters

'He's blessed by the gods': Inside a campaign event with Berlusconi's supporters
Photo: Piero Cruciatti/AFP

Perotti estimates the cost of the policy to be around 65 billion euros, while the League forecasts 30 billion and Forza Italia around 50 billion.

Capital Economics analyst Jack Allen doubts the proponents' growth claims and believes that the wealthiest will benefit the most from the reform.

“A 2015 study by the Bank of Italy estimated that households with low wealth would respond to a one euro increase in disposable income resulting from a tax cut by raising their spending by 60 cents,” he says.

“High-wealth households … would increase spending by just 40 cents.”

How will public debt be affected? 

Italy is groaning under the weight of a public debt of 2,256 billion euros, 131 percent of GDP — the second highest ratio in the EU behind Greece.

The big parties have promised to lower it, but the OCPI says that in the event they are unable to cover the cost of their policies, the debt would reach 134.8 percent of GDP under the PD, 135.8 percent under Forza Italia and 138.4 percent under the M5S.

Political cheat sheets:

“If we implement just a third of what has been promised, Italy will not be able to respect the (EU-imposed) deficit to GDP threshold of three percent,” says Perotti.

“Currently we are at 2.5 percent and we would just need to spend 8 billion euros more to reach three percent.”

Perotti calculates that “if implementing a flat tax has a cost of around 65 billion euros, to recover this money GDP growth would have to reach 160 billion, or 9 percent of current GDP. That is unthinkable.”

All parties apart from the League have promised to respect the threshold, and Allen claims that in order to do so they will have to cut spending.

“The government would have to accompany big tax cuts with big cuts to spending if it was to avoid a blow-out in the budget deficit,” he says.

By Celine Cornu

POLITICS

Italian PM Meloni refuses to back down on reporter ‘defamation’ trial

Italian Prime Minister Giorgia Meloni said on Tuesday she will not withdraw her defamation suit against anti-mafia reporter Roberto Saviano, despite growing criticism that her position of power might skew the trial in her favour.

Italian PM Meloni refuses to back down on reporter 'defamation' trial

On Tuesday, the hard-right leader told Italian daily Corriere della Sera that she was confident the case would be treated with the necessary “impartiality”.

Meloni sued anti-mafia reporter Saviano for alleged defamation after he called her a “bastard” in a 2020 televised outburst over her attitude towards vulnerable migrants.

Meloni’s Brothers of Italy party was in opposition at the time, but took office last month after an electoral campaign that promised to stop migrants crossing the Mediterranean from North Africa.

Press freedom watchdogs and supporters of Saviano have called for the trial, which opened earlier in November, to be scrapped.

READ ALSO: Anti-mafia reporter on trial for ‘defaming’ Italy’s far-right PM

“I don’t understand the request to withdraw the complaint on the pretext that I am now prime minister,” Meloni said.

“I believe that all this will be treated with impartiality, considering the separation of powers.”

She also added: “I am simply asking the court where the line is between the legitimate right to criticise, gratuitous insult and defamation.”

Saviano, best known for his international mafia bestseller “Gomorrah”, faces up to three years in prison if convicted.

The case dates back to December 2020 when Saviano was asked on a political TV chat show for a comment on the death of a six-month-old baby from Guinea in a shipwreck.

On the occasion, he railed at Meloni, who in 2019 had said that charity vessels which rescue migrants “should be sunk”.

Saviano is not the only journalist Meloni is taking to trial. One of the country’s best-known investigative reporters, Emiliano Fittipaldi, said last week the prime minister had sued him for defamation.

READ ALSO: Italian PM Meloni takes another investigative reporter to court

That trial is set to start in 2024.

Watchdogs say such trials are symbolic of a culture in Italy in which public figures intimidate reporters with repeated lawsuits, threatening the erosion of a free press.

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