The Specter of Wealth Tax Returns: The Unshakable Nightmare of Forced Expropriation

The Return of Wealth Tax in Italy: A Necessary Debate

As the Italian government prepares for the upcoming budget law, the idea of a wealth tax is once again making headlines.
This resurgence isn’t surprising, considering the dire financial state of the country, which always finds itself short on funds to finance yet another budgetary maneuver.

This time, after a three-year hiatus, the budget must also consider the strict guidelines imposed by the new EU Stability and Growth Pact.
This framework threatens to usher in a period of austerity for Italian citizens, as Brussels will no longer turn a blind eye to countries that neglect to outline a solid debt and deficit reduction strategy.

In response, Italy has proposed a Structural Budget Plan (PSB), detailing commitments to public finances aligned with the EU’s dictates.
This plan sets clear limits that cannot be exceeded by the promises of Prime Minister Meloni and her administration.

The Meloni Administration: A Financial Shortfall

For the government to balance the budget, confirm income tax reforms, and reduce the tax wedge, a total of €25 billion is needed.
However, Finance Minister Giancarlo Giorgetti revealed earlier in September that there is a shortfall of €10 billion.
The question then remains: how to bridge this gap?

In France, struggling with its own debt crisis, the government has proposed a wealth tax as an exceptional contribution from the wealthiest citizens.
Matteo Salvini, Italy’s Infrastructure Minister and Vice Premier, swiftly denied any intent to introduce such a tax, despite comments from the Democratic Party leader, Elly Schlein, advocating for a discussion on wealth taxation.

Schlein expressed support for an international minimum tax on multinational corporations and suggested that a concerted European approach to wealth tax could enhance its effectiveness.
This sparked immediate backlash from Salvini, who proposed that instead of a wealth tax, banks, which he accused of profiting excessively, should contribute more to support economic growth.

The Ongoing Debate on Wealth Tax

The conversation around the necessity of a wealth tax to stabilize Italy’s public finances has intensified.
Just recently, Nicola Fratoianni of AVS cited Oxfam data indicating that “70% of Italians” favor taxing the ultra-wealthy more heavily.

The specter of a wealth tax looms large, and support for an EU-level “super wealth tax” has also gained traction.
Schlein emphasized that while she does not support raising taxes on the middle class, she backs international taxation on the super-rich, suggesting it is essential to consider a concerted European approach.

Understanding Wealth Tax

Amidst all these discussions, it’s vital to clarify what a “wealth tax” entails.
Unlike income tax, a wealth tax is levied on an individual’s assets.
The Treasury Department’s history highlights previous instances of wealth taxation in Italy, including the controversial 1992 emergency levy on bank accounts introduced by the Amato government to stave off financial disaster.

Wealth Tax Across Europe

An analysis conducted in late 2023 by the Observatory of Public Accounts pointed out that while wealth taxation is often politicized as a threat to taxpayers, several forms of asset taxation are already present in many European countries, including Italy.
Currently, wealth taxes account for about 5.9% of total tax revenue in Italy, higher than the European average of 4.5%.

Despite ongoing discussions, the current Meloni government has largely rejected the notion of implementing a wealth tax.
Leaders from center-right parties have dismissed such proposals as leftist gimmicks that would harm the struggling middle class.

Interestingly, even figures not traditionally aligned with the left, such as former Minister Elsa Fornero, have suggested that Italy could benefit from considering a wealth tax, indicating that the debate around this topic is far from settled.