On Italy’s Flat Tax Needs and Sustainability of the Public Budget

Abstract

This paper aims to empirically investigate the sustainability of Italian national accounts with a hypothetical Flat Tax. After an introduction, where we will describe the Italian situation relatively before and after the euro introduction, we will tackle the problem of high tax pressure. In particular, we use a time series approach and Toda-Yamamoto test to check if the high tax pressure causes low growth in Italy. Finally, with ISTAT’ dataset, we will check sustainability on Italian revenue with a Flat Tax, considered it one of the possible solutions to low Italian economic growth.