Confindustria intervened in Hearing on Economic and Financial Document 2024 in the Budget Committees of the Chamber of Deputies and the Senate of the Republic.

La growth Italian surprised positively in 2023, reaching the 0,9%thanks to investment, still driven by construction, and the recovery of services. Looking ahead there are two powerful stimuli: the interest rate cut, which markets assume in June, July at the latest, and the implementation of the Pnrr. Conversely, various factors will tend to restrain the GDP Italy in the two-year period (albeit with a net positive effect): the cost of electricity, global bottlenecks in transport, the gradual exit from the superbonus. These are the premises with which Confindustria presented its position at the hearing held yesterday on the Def, at the Budget Committees of the House and Senate. If on growth and deficit reduction the CSC confirms what the public finance framework indicates, less in line is the forecast on debt: for the CSC it is at 139.1% of GDP in 2024, 1.8 points of GDP more than in 2023, and at 141.1% in 2025. For the government it is 137.8 and 138.9 respectively.

Some proposals on specific topics came from Confindustria:

Tax Reform

 About the implementation of the tax reformIt appreciates what has been done so far to lighten labour taxation and to simplify the system, but emphasises the need to continue the process of organic reform, particularly by intervening on the substantive structure of taxes, with a view to their reduction and rationalisationas also suggested in the Recommendations of the European Council. In our view, this should entail a broader redesign of the rules for taxing employee income, starting precisely with the cutting the contribution wedge. Also in terms of IRPEF It would be useful to review the intervention on rates and brackets, currently limited to 2024. Instead, the reform of theIRES - functional to making the Italian production system more competitive - the tax reduction should be achieved by enhancing specific types of investments and not limited to the current (moreover transitory) relief for new hires. We also suggest greater caution in eliminating tout-court measures to support the capitalisation of enterprises (think of theACE). In the absence of an overall redesign of IRES, there is, in fact, a risk of leaving companies without instruments for this purpose.

The implementation of the NRP

The real linchpin of the government's public policy strategy for the coming years is theimplementation of the NRP. Even in light of the public finance adjustment path mentioned above, Confindustria agrees with this approach. In terms of expenditure, the resources disbursed up to the early months of 2024 amounted to approximately EUR 45 billion, less than a quarter of the total endowment of over EUR 194 billion to be spent by 2026. The recent reshaping of the Plan has also led to an appreciable increase in the focus of resources on businesses: of the total reshaped resources, about 12 billion are intended for the latter, of which 6.3 for Transition 5.0 (for which the definition of access rules is still awaited) and 2.5 for dies green e net zero technologies. The reshaping of the NRP was highly anticipated by the business world, as, given the contents of the last budget law, the only resources for productive investments for 2024 (and probably by 2025) are to be found in the PNRR. Against this background, it will be even more important in the coming months to ensure the timely and effective implementation of the PNRR and, therefore, the actual grounding of resources, with respect to which, as of today, we still have significant uncertainties, especially with regard to public investments. We reiterate that this is a challenge to be met, also because, otherwise, we would weaken the ambition to build a common fiscal capacity at European level.

Mitigating the cost of energy

As already mentioned, the cost of electricity paid by companies remains higher in Italy than in the main EU countries and also compared to other major international competitors, such as the USA and Japan. Greater integration of the European system, a reform of the electricity marketwith the separation of fossil and renewable generation, which is expected to have progressively lower costs, as well as the development of new technologies and the implementation of careful policy measures (increased resources for ETS indirect cost compensation, implementation of Energy Security DL measures, etc.), could mitigate energy costs for Italian companies and reduce (though not eliminate) foreign dependence.

Transition 5.0

Reducing energy costs for Italian companies can and must also occur as a result of efficiency enhancement energy in production processes. Precisely because it aims to incentivise investments with this purpose, Confindustria believes that Transition 5.0among the new measures included in the revised NRP is crucial in strategic terms for the competitiveness of companies. All the more so because no further measures to support private investment were provided for in the Budget Law. However, on the Transition Plan 5.0 we highlight a number of critical issues that need attention. First and foremost, the exclusion of certain sectors and activities from access to the facility that do not meet the principle of not causing significant damage to the environment, as required by the NRP. Similarly, the importance of ensuring that the automatic instruments for supporting R&D investments are fully operational is represented. On the subject of Transition 5.0, it is also worth noting the concern of the business sector about the tight overall timeframe for the implementation of investments. In this perspective, we point out further elements of uncertainty on the investment plan, linked to the necessary implementation - we hope without delay - of the new reporting obligations envisaged for the 4.0 tax credits e Research and DevelopmentAlthough we understand the reasons of public finance underlying such an intervention, we cannot overlook how contracting companies' liquidity with an emergency regulation, which moreover has retroactive effect, does not help to give certainty to companies and undermine their ability to plan their next investments, also on the basis of the new Transition 5.0 plan.

Abolition of Plastic and Sugar tax

The DEF reports the revenue impacts due to the postponement to 1 July 2024 of the entry into force of the two consumption taxes, namely plastic tax e sugar taxwhich were introduced in 2020 and never became operational due to their serious criticalities. Confindustria considers their finalisation as a priority and no longer postponeable. suppressionsince their entry into force would have a highly penalising impact and, moreover, would not be offset by sufficient positive effects either in terms of revenue or in social or environmental terms.

The new Industrial Property, Competition and Civil Justice Code

With regard to reforms, the DEF/NRP mentions, among others, the new Industrial Property Codewhich is relevant both for the promotion of investment in research and development (R&D) and for the growth of innovative companies. The completion of this reform is an important step, also because it strengthens public-private partnerships in R&D and enhances negotiating autonomy in cases of privately financed public research. With regard to competition, the government's willingness to approve the relevant law annually is to be welcomed. At the same time, we continue to experience a certain political resistance to sharing the liberalising scope of the annual law and to ensure consistency between declarations of principle and individual legislative choices. Another key issue remains the efficiency of the civil justiceboth for the country's competitiveness and for the confidence of citizens and businesses. Confindustria's overall assessment of the actions undertaken in this field since 2021, in implementation of the PNRR, is positive.