Italy Supply Side Policies

1) Tax Cuts on Citizens 
Specific Tax Policy:  2020 Proposal - 
  • "a tax set at 15 percent for families earning up to 50,000 euros -- is part of the government contract signed by the League and Five Star, and would concern 50 million people including 35 million taxpayers
  • “We’re working so that the flat tax also involves families, employees,” 
  • Salvini put the cost of his proposal at between 12 billion euros and 15 billion euros in the 2020 budget. (Bloomberg) 
  • The plan envisions eventually moving to two income tax rates, one at 15 percent and the other at 20 percent for both companies and individuals. The government refers to the two-tier system as a “flat tax” plan, using the English-language term.

 Arguments Against: 
  • a reported Treasury estimate that a flat tax for families would cost 59.3 billion euros ($67.3 billion). 
  • Even if the cost of the flat tax were 15 billion euros, that would be “unsustainable.” She added: “We must be realistic given today’s economic situation.” (Laura Castelli)  
  • Pushing out the deficit could lead to another round of fighting with the EU.

 Arguments For:  
  • Taxation in Italy is among the highest in Europe. 
  • Salvini may be using the flat tax to cement his popularity with voters before European Parliament elections in May. 
  • “We’re convinced that if you lower taxes, the state receives less in the first year but from the second it receives more, the money is spent and invested.”
Potential Outcomes: 
  • Deputy premier and League leader Matteo Salvini says a partial implementation will cost between 12 billion euros ($14 billion) and 15 billion euros in next year’s budget.

2) Jobs Act 
Specific Deregulation Policy: 
  • New contract eliminating the obligation for workers' reinstatement if they are invalidly fired 
  • legal constraints for firms intending to monitor workers through electronic devices have been substantially weakened
  • Deregulation on the use of temporary contracts 
  • The new contract allows, for the first time, extremely cheap (for firms) layoffs depriving workers of the reinstatement right which used to protect them during the last 45 years.
Arguments For: 
  • Deregulation will drive business
Arguments Against: 
  • Workers rights are undermined 
Evaluation: 
  • Supply Side policies don't work:  they are constantly reiterated despite all evidences are against their effectiveness and appropriateness.
3) Train Deregulation
Specific Policy: Anti- Monopoly Regulation
  • Back in 2012, Italy opened its doors to rail competition. NTV Italo became the first privately owned company entering Italy's high-speed rail network.
  • Since then, NTV has been competing with Italy's incumbent Trenitalia, on the country's main high-speed routes. 
Arguments For: 
  • There will be more competition driving prices lower, excluding the presence of a monopoly 
  • More firms entering the industry could lead to more jobs created
  • More efficiency: Increase in customer satisfaction  
Arguments Against: 
  • The article detailed no arguments against, however perhaps we could assume that various routes that were deemed inefficient might be cut out of the system leaving some customers unhappy.  
Results: 
  • According to Prof. Andrea Giuricin, rail market share has grown up to 80%. Moreover, rail ticket prices have dropped by almost 40%. Travelers can find price competitive rail tickets.
  •  a competitive market can drive down prices, cut journey times and improve the rail customer experience.
  • it has won the battle for airline customers. Private railways offering an airline seating and ancillary services model provide a true alternative to air travel. (NTV is already taking away airlines market share. 

























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