Work, energy, taxation. Former PD Deputy Minister Maria Cecilia Guerra defends the PD’s agenda

Rome. One question stands out: if the PD, the main opposition party, stands for election to form a government, does its economic agenda have a solid foundation? We discuss this with Maria Cecilia Guerra, Professor of Public Finance, a PD MP, and former Under-Secretary of State at the Ministry of Labour in the Monti and Letta governments and at the Ministry of Economy and Finance (MEF) in the Conte II and Draghi governments. In recent years, the PD has put forward proposals that envisage heavy reliance on public intervention; critics say: you will have to choose between breaching the Stability Pact and raising taxes (Luciano Capone and Carlo Stagnaro discussed this in this newspaper yesterday). We ask Guerra to elaborate on the sustainability of some key proposals. Meanwhile, yesterday the Council of Ministers approved the energy bills decree, introducing a system to decouple electricity prices from gas prices. The PD is proposing a decoupling system with a ‘cap’ in the style of Pedro Sánchez; do you agree with the government? “It is a step in the direction we have indicated,” Guerra says, “The aim is to bring the price paid by the consumer closer to the cost incurred by the producer, thereby preventing the windfall profits enjoyed by those with low production costs who sell at the high price determined by the current marginal pricing mechanisms. Various implementation mechanisms can be discussed: for example, making hydroelectric concessions conditional on the establishment of long-term sales contracts at fixed prices. And at the same time, taking action to support the most vulnerable groups.” Let’s move on to the minimum wage. “We have adhered to the EU regulations which set out two criteria for determining the minimum wage: 60 per cent of the median wage or 50 per cent of the average wage, and it is this figure that we have based our proposal on. Our proposal dates back to 2023; the data available were INPS figures from a few years earlier, which we indexed to 2024, the date on which the proposal was due to come into force. Now they would need to be re-indexed. Some sectors might find it harder to implement, as they pay very low wages, but Article 36 of our Constitution must be respected.” The PD is also discussing a reduction in working hours whilst maintaining the same pay: 32 hours? “Our draft bill does not specify a fixed figure, but a reduction that could go as far as 32 hours; it would be wrong to impose a single figure for everyone. The proposal tackles a crucial distributional issue: the significant added value generated by technological innovation cannot benefit only the producer; it must also be distributed to workers: it is a question of fairness but also of economic sustainability. If the share going to labour is constantly reduced, consumption falls and the entire system risks collapsing.” The Democratic Party’s proposal looks to the future, says Guerra: “In some sectors, reduced working hours are already being trialled, with benefits in terms of productivity.” Another double-edged sword: pensions. The Democrats are calling for an end to the practice of adjusting pension eligibility criteria to life expectancy. Is this sustainable? “It is one thing to envisage flexibility in retirement under the contributions-based system: if I retire earlier, I receive a lower pension and vice versa – a principle on which we all agree, and which places the burden of adjustment on the individual, based on a conversion coefficient that depends on various factors. The demographic issue is quite another matter: the population is ageing, but to say, ‘if life expectancy increases by three months, you work three months longer’, amounts to shifting the entire burden onto the workforce. The problem must be tackled at a macro-economic level, by involving general taxation in the funding of the pension system and by focusing on increasing the labour force.” Even the measures proposed by the PD regarding healthcare and taxation are not cost-neutral – quite the contrary. “I would point out that we are faced with a majority government which is now presenting its fifth and final budget bill; a bill that provides only for temporary measures, a patchwork of measures designed to appease this or that group, and which bears witness to the failure of a government that promised major reforms but failed to deliver them. We believe, for example on taxation, that people with the same income should pay the same tax: no to flat-rate schemes, yes to a progressive and continuous tax rate.” Whilst the proposals from the broad coalition come at a cost, there are those (such as Avs) who say: a wealth tax would solve the problem. “Let’s change the name, and instead correct the mechanism whereby the super-rich, paradoxically, benefit from a tax system that, proportionally speaking, turns out to be regressive rather than progressive.” Some object: they’ll just leave. The Meloni government is proposing an exit tax; what does the PD say? “We agree on this.”