It is certainly true that Europe’s future, especially the euro area’s future hinges on Italy’s reforms. /Andrea Lorenzo Capusella, FT, 27 April 2021/
Between 1995 and 2019, in a quarter of a century, Italy’s productivity rose by a little more than quarter of the euro area’s average and GDP per capita fell to 10 per cent below the euro area average from above 9 per cent.
Undoubtedly, Italy needs sweeping structural reforms.
Nevertheless, as we learnt it in Hungary, everything boils down to taxation. We managed to introduce a new flat tax system, a restructured VAT regime, brand-new crisis taxes, a bank levy and the others. All of these resulted in a hugely successful fiscal consolidation in 18 months between the middle of 2010 and the end of 2011.
All the achievements of the Hungarian economy in the 2010s originated from the early reform of taxation.
It is clear that Italy cannot hedge the issue called taxation.
Governor Matolcsy, MNB, the Central Bank of Hungary
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