Abstract

In this paper it is argued that current Italian situation needs urgently, also on the revenue side, some tough measures. In fact, there is the need to defend the conditions of the weakest people, it is necessary to retrieve resources useful to produce a real benefit in terms of increased employment, investment, exports. These actions will be financed being aware of the constraints: the marginal tax rate, that overall burdens on productive activities, will no longer increase; it is necessary that the system is actually progressive; it is necessary that taxes do not further hinder investments and exports. In this context, one of the possible measures is the abolition of private IRAP (Italian regional tax on productive activities) compensated, as it is assumed in the Document approved by Southern institutions, by consumption taxes. Since it is claimed that this solution would result in an additional burden on households, mostly on the less affluent ones, in this paper the effect the abolition of IRAP has on consumption is estimated, showing that it largely compensates the effect of higher tax rates which directly affect consumption.