Italy Budgets and Public Debt

The Italian state budget, eliminated starting from 1926 the two accessory categories of railways constructions and round trips, is made up of two parts: actual income and expenditure and income and expenditure for the movement of capital. However, it is the first part that is by far the most important and that reflects the true situation of the state finances, while the second, which includes the start-ups of debts and repayments, indicates the patrimonial situation. In examining the trend of the budget from 1913-14 to 1932-33 it is therefore appropriate to take into account only the data relating to actual income and expenditure (as well as always referred to during the course of the article) and to consider the trend of the public debt (in billions of lire) starts.

According to ITYPETRAVEL, the numerous fiscal measures adopted during the war explain the progressive increase in revenues, which the growing revenue from extraordinary taxes and the devaluation of the currency accentuated even more in the immediate post-war period. The decline that occurred in 1922-23 is due to the exhaustion of the transitional taxes as well as to the immediate repercussions of the tax reorganization (as it abolished some taxes and granted numerous reliefs): while the increase determined in subsequent years is mainly due to the enlargement of the tax base and the severe sanctions against tax evasions which constitute the basis of the reorganization itself. Expenses during the war years increased at a much faster pace than revenues and, both for the costs deriving from the liquidation of certain war management, and due to the rise in prices linked to inflation, they reached their maximum in 1920-21. Due to the necessary reduction in extraordinary expenses and the severe financial reorganization, they contracted in 1922-23 by more than ⅓ compared to the previous year and continued to decrease until the balance of the budget was reached and then increased slightly in connection with the increase. of revenue. After all that has already been said about the repercussions of the deflation crisis and therefore of the world crisis on the income and expenditure of the state, the figures relating to the last few years can also be easily understood.

The backbone of the Italian budget is made up of tax revenues, both for their stability character and because under normal conditions they give a revenue  that reaches 8/10 of the total income. It is as a rule direct taxes (and among these mainly taxes on income from movable wealth) that ensure the highest contribution to the state; however, they have followed shortly after and have also been overtaken in recent years by indirect taxes on consumption (of which customs duties and manufacturing taxes on sugar are of particular importance). About half of the actual income, and in some years more than half, derives from these two fundamental assets, while the taxes on the exchange of wealth (registration fees, stamps and stamps on exchanges, as well as many others of lesser entity), the state monopolies (especially the revenues attributed to the state as a tax on the consumption of tobacco) and to a small extent the game of the lottery give a total of about 30% of the revenues themselves. Other revenues include the income from public services, state-owned income and net profits of autonomous companies, that is, of the railways administration established in 1905 (in surplus after the war only from 1924-25 to 1930-31), of the company postal and telegraphic services, that for telephone services and that of monopolies (the tax revenues of the latter are also, as already mentioned, devolved to the state, so that the profit in question here is refers only to industrial revenues, reserved for the company), established respectively in April 1925, June 1925 and December 1927. The management leftovers of the state-owned forests and the road company, established in May 1926 and February 1930, are instead particularly destined to contribute to the expenditure for the National Forestry Militia and the execution of extraordinary works. The expenses that currently weigh the most on the state budget are those for the service of public debt, for military defense, for financial administration services, for public works and for public education. Expenditure dependent on the war which in 1918-19 reached the maximum figure of 26 billion are now reduced to about one billion.

The progressive increase in state debt in the immediate post-war period, the subsequent policy of reduction and consolidation, and the new recourse to credit in recent years have already been sufficiently illustrated in the course of the article and we therefore limit ourselves to giving the figures of the internal public debt at the end of each post-war period (in billions of lire).

It is also worth mentioning the recent reform of the Cassa for the amortization of internal public debt (decree no. 424 of 26 April 1930) which, by ensuring the Cassa itself the most complete autonomy and providing it with its own financial means (fundamental direct income of 500 million resulting from an increase in the selling price of tobaccos), gave it the opportunity to intensify and carry out its important function at a constant pace and on the other hand relieved the state from the obligation to donate budget surpluses to the Cassa and interest on amortized securities. The task of the Cassa was limited to consolidated debts, which constitute the absolutely prevalent part of the patrimonial debts.

Of the total debts contracted by Italy with foreign countries as a result of the war (24.22 billion), the smaller ones (228 million) having been extinguished at the end of 1925 remained the debt with the United States and that with England the whose amount, including interest, was consolidated under the Washington (November 14, 1925) and London (January 27, 1926) agreements, respectively, at 2408 million dollars and 276.7 million pounds. The payment was divided into sixty-two progressive annuities, and on March 3, 1926 the War Debt Amortization Fund was established to provide for the payment of the aforementioned annuities with income from the reparation annuities of Germany. By July 1931, 39.6 million dollars and 26.6 million pounds had already been paid, when the payment was suspended due to the Hoover moratorium. Due to the failure to extend this, despite the continued shortage of Germany, the installment of December 13, 1932 and part of that of June 15, 1933 (total 22.2 million dollars) was paid to the United States, pending an international agreement. to settle the question of debts and reparations definitively (see reparations).

The capital of the post-war foreign debt amounted to 1653 million lire at 30 June 1933.

Money and credit. – Unified bank issue with r. decr. May 6, 1926 n. 812, which attributed to the Bank of Italy (whose constitution dates back to 1893) the gold and equivalent reserves of the Banks of Naples and Sicily, their own receivables from the Treasury and the Consortium for industrial subsidies, as well as the amount of their bank notes in circulation as of June 30, 1926, and also unified, following the stabilization law of December 1927, the banking circulation on behalf of commerce and that on behalf of the state, the banking circulation of the kingdom now depends exclusively on the Bank of Italy. For the r. decr. law 22 December 1927 n. 2325 this is obliged to convert, upon presentation at the head office and on the basis of the new gold parity (fixed at the rate of 7.919 gr. Of fine gold for every 100 lire), your notes in gold or, at your choice, in currencies of foreign countries in which convertibility into gold is in force; and to keep a reserve in gold or in corresponding currencies of not less than 40% of the amount of its notes in circulation and of any other commitment on sight (a limit which, following the agreements with the Treasury of June 1928, can also drop to 30% ). The Bank of Italy is also responsible for the exercise of all clearing houses in the kingdom as well as a supervisory function over all banking companies that collect deposits (decree law no. 1511 of 7 December 1926).

The four major ordinary credit banks are: the Italian commercial bank, the Italian credit, the Banco di Roma and the Italian maritime credit institute (established respectively in 1894, 1895, 1880 and 1916), which together bring together about 25% of the total assets of credit institutions and absorb about 23% of deposits. Furthermore, some parastate institutions have considerable importance in our banking system, mainly the Banco di Napoli (1863) and the Banco di Sicilia (1860).

For more information on Italian finances see. the articles under the individual representatives, e.g., bank; balance; public debt; issue; taxes and duties, etc.

Italy Budgets and Public Debt