Monday, 14 November 2011
the discussion on "fiscal disinflation" continues...
The discussion provided by Francesco Franco on fiscal disinflation / fiscal devaluation reached The Economist. You can follow it here
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have been working based in Rome and just thought that it's interesting that the package from Monti has some distinctive features which I have not yet seen clearly in Portugal's measures against the crisis (also as per my initial comments on the Troika agreement): out of Eur 30bn in taxation (including VAT increases of 2pp) and expenditure cuts (60/40 share possibly acknowledging difficulty of cuts in such short term), Eur 10bn are dedicated to 'STIMULATING GROWTH'.
ReplyDeleteFirst it is interesting that this is mentioned: a realization (unlike Portugal that seems mostly focused on cuts ) that there is nowhere to go on the fiscal story without growth. Second it is interesting they are going for some fiscal devaluation (something Portugal left out completely).
Here are some of the growth measures:
(a) possible deduction of labour costs in calculation of the IRAP tax (accounts for estimated Euro 1.5bn in savings for corporations in 2012 and E 2bn in 2013-14,
(b) possible further tax credit from employing young people and women,
(c) loan guarantee fund for SMEs reinforced
(d) liberalizations, etc