#1 QUICK WORD: THE TAX SECTOR

Hi reader,

today’s article takes life from some questions that I have asked my employer and his wife, who have been running a tax consulting firm for many years. My idea is to follow the flow of time, from the beginning of their activity in the 1980s to today, to compare the situation then versus now. The interview has touched upon different key topics and I hope you will find enjoyable and intuitive the way I have organized them.

She was an accountant at another tax consulting firm; he had just graduated from an industrial technical institute: this is the point from which our guests started their activity in the first half of the 80s. They really started from scratch, their parents were of humble birth and, although being fascinated by the subject, he especially had to study the matter to be able to practice it. In thinking about it later, they do not know how they have been able to persuade the first clients to turn to them. Maybe, they say, the trust they inspired has played an important role, a trust which has then been matched by their expertise and professionalism. Trust, expertise, professionalism. In which other places would we like to find these three pillars? Everywhere, you would say, and I would certainly like to find them at least inside the Parliament and the Public Administration (PA). I will talk later about the Parliament, but for now I want to focus on the PA and in particular on the Internal Revenue Service (IRS). At my question “is there a lack of trust on the part of the State in the taxpayers?”, my employer has laughed saying that, in fact, the IRS proceed from the assumption that all taxpayers are evaders (even though this prejudice is declining with new generations). In an ideal world, we would all be honest citizens compliant with tax obligations, but we live in Italy and trust has never been the basis of the relations between the State and private individuals, since the beginning of our national history. Not that taxpayers are really encouraged to comply with tax regulations: Italy is a slow country and the incentives to comply with the rules are always lower than the gains to transgress them, thus those who want to evade taxes always find a way to persuade others to go along with them and gain something in the short run instead of hoping in a future deduction. A happy ending for everybody, or almost.

But let’s go back to the 80s, with the little firm which kept acquiring new clients and which at the end of that decade expanded with new offices due to the dossiers and the registers requiring much space. Being a digital native, I find it nearly unbelievable: they did everything by hand at the time. The registers, the bills, the tax declarations were handwritten and delivered in person. But digitalization was not long in coming, and thus at the beginning of the 1990s the protagonists of our history bought their first computer with management software.

However, if at an individual level we have become more productive and effective thanks to new technologies, it paradoxically seems that digitalization has worsened the relationship with the State. This happens because in these 30 years the IRS, thanks to computer programs allowing to analyze data, has been able and is still able to store and manage a higher and higher amount of data and has started to ask for more and more of them to individuals. According to our guests, however, the disorganization and the inefficiency of the PA has remained the same, thus the demand for ever-more information makes life impossible for accountants, who must keep up with many more deadlines and many more forms to fill out, without bringing real benefit to the taxpayers. Indeed, these latter have not the ability, the patience, or the time to keep up with this huge bulk of data: for example, most of the precompiled tax declarations (IRS’s latest idea) needs anyway a check from the taxpayer, defeating its purpose and increasing rather than lightening the accountants’ work and their clients’ parcel. Moreover, Italy is not particularly versed in new technologies: the Italian population is one of the oldest in Europe, thus many people cannot even interact with a computer, much less filling up forms online or autonomously checking their tax declarations. All of this clearly makes one doubt the need for such services and shines a light on the legislators’ lack of understanding of citizens’ real needs.

In your opinion, reader, what else has changed in these 30 years? Our guests can tell you what has not changed: the need to reform the tax system once and for all in an organic and farsighted manner. Yes, because, although the slogan “less taxes” is used by many political parties in electoral campaigns (and from time immemorial), the reforms are implemented with a single purpose: to make revenue. Trying to increase government revenue is not necessarily a bad thing. However, if behind it there is no long-term vision but only the need to scrape up some extra cash from taxpayers’ pockets (even at the cost of tricking people with deliberately complicated norms), and if these interventions are always delayed and then implemented as an emergency, it is clear that no solution can be seen on the horizon. And on top of that, this emergency state of work is transferred also to the specialists of this sector, who live in a condition of constant stress and can no more have a normal relationship with their clients, the thing that made the topic so fascinating when our guests started working.

How have we found ourselves in such chaos? The respondents have made me notice that there is a substantial ignorance on this subject on the part of the policymakers inside the parliamentary committees which focus on such norms. Let’s step back: in Parliament, it is not everybody’s task to draft norms, but only of those who are inside committees. But how are they chosen? Here is the trick. In Parliament, there obviously are tax specialists and they are also inserted into the commissions, but once inside they find themselves in minority or anyway they give more importance to conveying the party’s ideology in the laws. Ergo, in Parliament the ideological element prevails over expertise and pragmatism. It seems that once one gets to power, no matter how strongly one wants to improve the system and has at heart one’s country, other interests enter into play, like the interest to follow one’s party lines to avoid seeing one’s career opportunities compromised. All of this prevails over good politics, unfortunately.

Our guests admit that they are disappointed but still hope to see one day a government managing things seriously, and I ask you, reader: is Italy such an impossible-to-change country, where one must passively rest on fate, hoping for the benevolence of a government? Or should we instead have the possibility to elect competent people working not for party mechanisms but to improve our country’s condition?

That’s not all. If there is such gross inability to manage and understand the mechanisms of the tax sector, looking at the ignorance inside Parliament is nothing but the tip of the iceberg: the average taxpayer does not know or understand anything about levies and deadlines, and this widespread ignorance of the population is without doubt caused by the deficiencies of our educational system. Once school is over, the great majority of young taxpayers is utterly ignorant about any notion concerning this topic. The only ones having a chance are the “lucky”, those who attended an economic technical institute or those few who had far-sighted good-willed teachers, who sacrificed hours of their courses to give some basic notion to future citizens. However, here too, one should not feel lucky because one has learned something essential for one’s life, and we certainly should not entrust to luck the education of young generations. In fact, even though our educational system thus sees subjects like economics as easily ignorable, all new taxpayers should have the right to know at least the basics of how they will have to manage their finances in a world which does not excuse ignorance.

At the end of our discussion, our guests and I left with the following question: what should we do to change this situation?

For starters, we at CTZN.eu have already talked about our idea of a school reform (which you can find here) and, among the various proposals, we have proposed to add as a compulsory subject civic education/law (which has indeed become compulsory since the 2020/2021 academic year). Now we feel like adding (an idea supported also by this interview’s protagonists) that we should make a basis of economic education and financial sciences compulsory for everybody, to be able to form citizens knowledgeable about the economic and tax system in which they will live and about the fact that paying taxes for making the State work is a good for everyone. There is the need for a specific and systematic subject taught by professionals, who could show students how theory is realized with practical examples linked to current events. This new subject would be taught starting in primary school, at first at a basic level and linked with civic education and then split into a specific subject taught until the end of high school.

Furthermore, we think that the lack of legislators’ expertise is a serious problem that must be discussed and solved. We should be able to trust our representatives who, instead of bowing down to party interests, should have at heart the interest and well-being of citizens. There are many changes that can only be made at the institutional level, but there are as many concrete actions that we the citizens can do firsthand: making our voice heard by asking legislators for a serious rediscussion of the distribution of roles inside the Parliament; following the news and identifying our country’s problems, discussing it with those around us; signing online petitions asking for constructive reforms in this respect.

Do you not know where to start? As a matter of fact, you already did by reading this article and getting informed on the topic. To keep going, you can share this analysis and your thoughts with others and sign this petition which demands a reform of the Italian electoral system (even though it is in Italian).

What do you think of this interview, reader? Would you like to read others like this? Which are the elements that struck you the most or that left you most puzzled?

Let us know by leaving a comment here, sending us an email with your reflections or commenting on the related post on our social profiles.

Thank you for your attention,

Maria Chiara Bodda

Mail: ctzn.eu@gmail.com

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