Two bits of madness about the budget

Observers who have become engrossed in the future of the Budget Bill have chosen to focus on a non-issue and have decided to turn a blind eye to the real disgrace contained within the budget. This non-issue, which has been turned into a major drama by the opposition and by newspapers most critical of the government, centres on the derogatory nickname given to the Budget Bill. It is referred to as a ‘manovrina’ – in a derogatory tone – to highlight, in some cases, the poverty of its content and, in others, the government’s lack of courage. It does not take much to realise that having to deal with a ‘manovrina’ in the budget session preceding an election is not bad news but a political miracle: displeasing everyone, or almost everyone, means abandoning the idea of turning the budget into an excessive giveaway and, compared to what could have been a pre-election budget prey to the hysteria of parties desperately seeking votes, having a mini-budget – however empty, timid and designed largely to fund what had already been funded a year ago, rather than to force potential centre-right voters into early retirement – is the best-case scenario one could have hoped for.

On the other hand, what is striking is the almost total absence of debate in the face of an obscenity that has now become entrenched amongst a significant section of public opinion, which for years has chosen to regard as legitimate the use of a lever that, to a liberal voter, should make one’s skin crawl: windfall profits. The idea that a company’s profit can be regarded in a discretionary – and therefore non-objective – manner as ‘extra’ is nothing new in Italy. In 2022, the Draghi government introduced a one-off levy on energy companies. And from that point onwards, the issue of windfall profits has consistently cropped up in the discussions leading up to the budget. Under the Meloni government, windfall profits have coincided with the profits generated by banks (and sometimes also by insurance companies). 

It has happened again in this budget, which has estimated that it will find – though it is unclear how – five billion from measures targeting the financial sector, including banks (banks that are making very healthy profits, but which, for mysterious reasons, already pay a corporate tax rate 3.5 percentage points higher than the standard rate and a regional business tax rate 2.75 percentage points higher than the standard national rate)The almost total silence surrounding the issue of windfall profits – the main point of debate being whether the additional taxation is sufficient or not bold enough – signals not only the complete absence of critical thinking amongst so-called liberals but also an interesting shift with unforeseen consequences. In the past, before a budget was tabled, there used to be a debate – usually led by the left – on the merits of taxing wealth. Today, however, we have reached the point of blaming those who generate that wealth, fuelling the idea that profits can be ‘extra’, that making a lot of money is a sin to be punished, and that targeting the rich to help the less wealthy is a concept that needs to be accepted. If politicians regard the market in which banks operate as rife with injustices, due to imperfect competition, they should try to tackle the barriers to customer mobility, the restrictions on new entrants, and the ability to compare offers. If, on the other hand, they do not take action to foster greater competition, they cannot assume that the market is as distorted as one might believe. And if the only factor driving politicians to penalise those who make large profits is the discretionary criterion by which such profits are deemed ‘excessive’, it is easy to argue that the problem is not taxing the banks: the problem is having a ruling class willing to turn the demonisation of profit into a unifying force to inject more energy into Italy. The mini-budget is not the problem; the demonisation of profit perhaps is.