Italy - Fiscal Policy

 DISCLAIMER: I may have forgotten that there was a word limit until I was on part 3 of the assignment.

1. Give two specific examples of fiscal policies implemented or discussed in your country in the past five years.

Italy and the EU agreed on a stability program where Italy will receive a certain influx of money that they will be able to use in order to increase the country's GDP and decrease debt. They do this by planning on increasing public investments, and making reforms to the tax system.

Italy adopted a fiscal Consolidation package in 2011. This idea implemented tax reforms meant to increase consumption in the economy as well as increase in property tax. These reforms ultimately reduce the taxes on capital and labor to increase taxes towards consumption (by raising indirect taxes) and property.

1. Explain one argument for and one argument against each of the policies, identifying the stakeholders backing each argument.

For the stability program, the Italian government would be gaining a lot because they are receiving money from the NGEU (New Generation EU) which they can then use to grow their economy which has been in turmoil for a while. By introducing money into the economy, they will also be creating jobs which will benefit the citizens. With the influx of funds they will also be able to decrease the country's debt which will likely mean they have the option to lower taxes which benefits both the government and the citizens.

Against the stability program, could also be the citizens, if the country doesnt implement the money in a good way, it will end up affecting the people. By planning to raise public investments, the government could possibly provide jobs and stimulate the economy, but without proper implementation into projects that matter and make a difference, the money would go to waste and end up hurting the economy. This deal isnt also particularly good for the EU because they are just putting their faith into the Italian government (as far as I can tell) which could go south easily. 

For the fiscal consolidation package in 2011, the Italian government would be largely benefitting from these tax reforms beacuse they will be gaining more money from inderect taxes which are something people have less control over. By raising the property tax as well, people would have to either leave the country or deal with the higher taxes because they need to live somewhere. This may also benefit any third parties that Italy is indebted to becuase the government will have more money to decrease debt.

The fiscal consolidation package does not benefit the people of Italy because they are being taxed more in areas they have less control over, consumption and property. This affects not only the general populus but also it largely affects owners/managers because although the government could use the increase in cash to stimulate the economy, this could cause an increase in minimum wages becuase people are paying more for taxes and there is more money in the market. 

1. Review the trend in government debt over the past five years in your country. How does the issue of government debt play into discussions of your policies? 

Italy has an ever incereasing govenrment debt with a large jump in the past year alone. This affects these policies heavily because the government may not have felt the need to implement these reforms/policies without the amount of debt they have. Italy is on rocky ground with the EU due to their debt which is why they have mainly just made tax reforms and increased government spending into the economy to decrease public debt.

“Italy Puts Growth at the Heart of Its Debt Reduction Strategy.” Fitch Ratings: Credit Ratings & Analysis for Financial Markets, Fitch Ratings, 27 Apr. 2021, 11:01 am, www.fitchratings.com/research/sovereigns/italy-puts-growth-at-heart-of-its-debt-reduction-strategy-27-04-2021.  

Arachi, Giampaolo, et al. “Fiscal Reforms during Fiscal Consolidation: The Case of Italy.” JSTOR, 17 Feb. 2012, www.jstor.org/stable/41819615?read-now=1&refreqid=excelsior%3Ab6e9ac1638af88d02fbbc95ae664b9ad&seq=1#page_scan_tab_contents.

Varrella, Simona. “Italy: Government Debt to GDP Ratio 2003-2020.” Statista, 11 June 2021, www.statista.com/statistics/582803/government-debt-to-gdp-ratio-italy/.