The more we talk An added bonusThe more data and analysis available describing the effects of this measure, the more the main problem emerges that we have to grapple with today, three years after the introduction of the maximum tax credit: it has been used more than anyone who thought of it expected, and it has produced consequences. In clear conflict with each other, while promoting growth, it is difficult to measure it in a timely but consistent manner, and a difficult burden on public finances.
To describe the impact of the super bonus, it is useful to re-read the testimony of Pietro Tommasino, the Bank of Italy’s economic restructuring department, to Parliament at the end of March. In particular, it highlights three key elements for understanding how this measure will affect the Italian economy: the number of construction companies involved, the effects on growth, and those on public finances. These are the same three elements that influence the choices the government must make to “get out” of the super reward cycle.
construction companies involved
In the economic survey of industrial and service companies conducted at the beginning of last fall, about 70 percent of companies operating in the field of residential construction, which include at least 10 employees, declared that they had performed jobs that benefited from the high reward in the first nine months of last year. 2022 In the survey on inflation and growth expectations, which the Bank of Italy conducts quarterly, the share of companies active in the construction sector with at least 50 employees and whose jobs benefit, at least in part, from Superbonus is about 55 percent at the end of last year and 50 percent in the first quarter From 2023. Similar proportions are found in the projections set for the current year as a whole, with a decrease in the latest survey compared to three months earlier in the proportion of companies that – indicating shares of more than a third of jobs benefiting from the stimulus. This evidence is consistent with the gradual and moderate impact of the bonus on the sector’s production during this year.
effects on growth
The macroeconomic effect of construction bonuses’ is not limited to achieving ‘additional’ construction investment. The multiplier effects determined by the stimulation of aggregate demand and employment must be added to the mechanical effect of the increase in investments: according to our assessments, and based on the elasticities included in the Bank of Italy’s econometric model, the multiplier The associated increase in spending on construction can be greater than unity, not unlike public investment. The multiplier associated with public resources used to facilitate “alternative” interventions, i.e. to finance investments that could have been made even in the absence of the stimulus, “is also positive.” These resources “produce economic effects by freeing up private funds which are thus saved for alternative uses; So it takes the form of a kind of transfer to families by the public sector.”
Impact on public finances
The measures adopted “have a significant cost to the public accounts that must be assessed given the lower impact of this type of investment on productivity and economic growth in the long term than potential alternative uses.” Moreover, deductions at rates equal to or greater than 100 percent “may lead to increased costs, since taxpayers – who do not participate in any way in the expense or participate in a limited way – have no interest in containing it”. It was found that the cost of the interventions “is much higher than the initial estimates. This confirms the shortcomings in terms of the transparency of the amounts actually allocated and the control of accounts associated with the use of tax exemptions as a tool of budgetary policy.”
Perspective, how to get out of the Superbonus
Once this stage of discussion has been overcome and the super premium and other construction subsidies reconsidered, “an effort will have to be made to design energy efficiency incentives that are both stable in the long term (they should produce effects consistent with the commitments made by Italy” in the European context) and sustainable. for public finances; Efficient and effective, that is, capable of maximizing the share of “extra” investments on the one hand, and on the other hand having a significant impact on a large share of real estate assets; fair, i.e. such as to focus resources on the most needy families (also in the interest of their efficiency).Written by Fabio Encinga)
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