The true public deficit: the inefficiency of the public administration

The Inefficiency of Public Finance Processes

One must come to terms with the fact that it is all useless stuff: mountains of data and statistical elaborations that, already the day after their publication, are not even good for fueling the bonfire of controversies.

It is truly baroque and not very credible a decision-making process for public finance based on the Def that is presented in March of the previous year, only to be updated in mid-September: it serves only the European Commission, to arm its long arm with a preventive examination of the public finance documents that open the infringement procedures for excessive deficit and debt.
A litany that renews itself with a back-and-forth of draft documents that intensifies until the preparation of the budget law for the new year, with the Parliament called to ratify what has already been decided in the triangulation between Palazzo Chigi, via XX settembre, and the Brussels Commission.

The Fiscal Outlook for 2024

For 2024, with the infringement procedure already open, on one hand, there are those who fear the need for a fiscal maneuver to reduce the deficit, on the other hand, there are those who hope that the treasury of higher tax revenues, with 10 billion euros already collected more than expected, could reach three times as much if the adhesions to the preventive tax agreement for VAT payers are successful.
This agreement allows, for a two-year period, to pay taxes not based on actual earnings but based on what is anticipated by the Revenue Agency, thus favoring the voluntary compliance with tax obligations.

Together with the spontaneous increase in indirect revenues due to rising prices, for a year now, the acceleration of collection procedures is helping the government not to press on the tax accelerator.

Rethinking Public Spending

On the spending side, it is necessary to reconsider the complex issue of the National Recovery and Resilience Plan (PNRR): this is a very heavy financial commitment for Italy, in terms of debt contracted directly with the European Union, against rather uncertain systemic benefits.

There is a need for a strict selection of the interventions already planned: the euphoria of zero-cost financing by the ECB that spread in the years when the New Generation EU program was conceived, with the dual transition in the energy-environmental field and in the IT sector, must be placed in a context of increasing costs and much less rosy returns than promised.

It is pointless to try to solve individual problems that arise every day by adding new paragraphs and articles that modify and integrate the previous regulations: the inextricable tangle that arises requires further clarifications and always new adjustments.

Instead of continuing to parcel out spending interventions at the local and regional levels, it is necessary to make administrative services more efficient, aiming for their overall reorganization based on information technology: this would be the best way to increase the overall productivity of the country.

Public infrastructure must aim for high-quality goals, reducing not only management costs but above all the response times of bureaucracy: this is the real deficit weighing on Italy.