What Italy is doing to encourage economic growth


Luigi Di Maio's letter sent to all Italian entrepreneurs (translated in English from the Italian version published in Il Sole 24 Ore)

"Dear Director,

I'm sending to your newspaper an open letter addressed to all Italian entrepreneurs, in order to explain the measures for companies contained in the budget plan. First of all, some general considerations. This government, and particularly me as Minister of Economic Development, is fully aware of the importance of small and medium-sized enterprises for the development of our country.

I am also fully aware of the fact that in the last years all the companies have suffered from both the crisis and the little consideration from the State in developing the best solutions. I would like to have a continuous confrontation with the representatives of business associations on the achievement of concrete results as soon as possible, and on the definition of a development model for the future. Moreover, another priority is to solve immediately the problems of enterprises that today are dealing with too many paperworks. We also have to understand together what is the right direction for the development of Italy, talking about investments, exports, facilities. I hereby announce that, thanks to an amendment in the Budget Law, we will pay, in joint action with Cdp (Deposit and Consignment Office), 50% of the Public Administration's debt in respect of companies by 2019 (about 30 billions).

We have already begun to move in this direction, through the rules that fall within the budget plan. We start to lower taxes. We started by putting a fixed rate of 15% for VAT registration and small enterprises up to 65,000 euro. We are talking about one million people who will finally have more money in their pockets and less bureaucracy. In 2020 we will also introduce the 20% rate for companies with incomes between 65,000 and 100,000 euro.

This tax will replace Irpef and Irap, lowering the tax burden and eliminating both the withholding tax and VAT. We will significantly lower the IRES rate. We will reduce it from 24 to 15%, and we extend this rate to all those invest profits in capital goods. We will double the deductibility of the IMU on the sheds, bringing it from 20 to 40%. I hope to bring it to 50% when the budget plan will be under discussion in the Senate.
It's a measure requested by thousands of entrepreneurs: now it finds a real response.

The tax burden then begins to fall for those who have always paid more until now: the smallest. There is also other good news for companies. We have guaranteed continuity of the incentives for technological innovation ("Enterprise 4.0") by postponing the hyper-depreciation on investments until 2019. We also extend the super-amortization for specific digital software to 40% into the next year. "Training 4.0" is also confirmed. We have provided a voucher (up to 40,000 euro) for SMEs to use a digital transformation manager.

There will also be important changes to the cost of labor, one of the main problems for entrepreneurs. We will no longer delay this urgency and reduce it. In the meantime, we have introduced a super bonus up to 8,000 euro per year for those who will take full marks with open-ended contracts for young graduates or PhDs. We will reward those who reward.

I am convinced that the best way to help companies, besides avoiding to strangle them with the highest tax in Europe, is not to complicate things. The Simplifications Decree, which is going to be approved next week, eliminates some absurd bureaucratic constraints. For example, it cuts off existing post-war leaks like the register of butter and sugar. The Sistri system will be canceled.

What I have told you so far is needed to start settling what's wrong and to intervene on emergencies. But as I told you at the beginning, we are also thinking about the future. We want to invest in three areas: a plan for innovation, an extraordinary plan for exports and finally a plan for infrastructure.

On innovation, we will create the first Italian fund to support Venture Capital, expecting to invest one billion a year. The immediate objective is to favor investments in VC, another one is to favor the dimensional growth of the Italian startups, in order to make them compete in the global scenario. We want to encourage our young talents to focus on artificial intelligence and on the Blockchain: we have created an ad hoc fund for experimenting with these technologies, with an initial budget of 15 million a year until 2021.

On investments, the Cdp will help us in the future. Together with the government, with its new industrial plan, it has provided over 200 billion euro for the next 3 years to support the country's revitalisation plans. It will serve to revive the industrial structure, with a strong focus on the growth and development of small and medium-sized Italian companies, the beating heart of our economy. A part of these resources will be used in order to allow their growth and for the development of exports.

The new CdP, with the governance led by successful managers such as Fabrizio Palermo, also wants to focus its action on infrastructures, territories and public administration.

I think "infrastructure" is a beautiful word. Starting from the digital infrastructures, that are the motorways of the future and which are strategic for Italy, as were the motorways in the 60s for economic development. Hundreds of new infrastructures are needed across the country. These are immediate opportunities for companies: opportunities for the future, which cannot be lost. They are often blocked by the abstruse complexity of the Procurement Code. We are going to intervene on this too, in order to simplify it through a delegated legislation, in order to release billions of euro of investments. We can afford to do so because, before Christmas, the anti-corruption law will be approved in Parliament: we will prevent the "sly people" from taking part in the public procurements. Who is convicted of offences against the public administration is out of everything.

We leave room only for honest entrepreneurs who will no longer be forced to give up public procurements scared by overly complicated codes. On Tuesday 11 I will start the permanent table for small and medium-sized businesses at MISE: it will be the venue to compare ourselves on all the needs and demands of entrepreneurs. I think our goals are common and we need to find the best strategy to reach them. Italy is like a majestic eagle that has broken its legs. Before you go back to fly you need to get back on your feet and start walking again. After which it can once again take off and reach new heights. If we work together aware of the difficulties, we could soon take flight".

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