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Home Opinion Economic recovery strengthens Renzi’s reformist zeal
State of the Left - Italy

Economic recovery strengthens Renzi’s reformist zeal

Mattia Guidi - 15 September 2015

The Italian prime minister wants to use the momentum of better economic growth and unemployment figures to win votes on the left and right, with symbolic moves on civil partnerships and property taxes

September started with some good news for Matteo Renzi: Italy performed better than expected both in terms of economic growth and unemployment. Although these results are not yet satisfactory in absolute terms, they indicate an acceleration in economic recovery that allows the government to claim that its recipes are working well. The fact that the estimated growth for this year (0.7 per cent) has been almost reached in six months means that the executive will face fewer constraints in drafting the 2016 budget law.

Renzi now hopes to gain momentum from this news and use it to overcome resistance  from both the right and the left of his coalition. The constitutional reform, with the multiple readings requested by the Italian constitution, is still a field in which Renzi and his leftwing minority are battling. A group of 25 senators is determined to reintroduce the direct election for senators, a modification that would further slow down the reform process. Their argument is that, given the new electoral system (which assigns the winning party a ‘majority prize’ of 55 per cent of the lower house’s seats), and given that the government will not need the senate’s confidence vote to stay in power, a more powerful and more democratically legitimised senate is needed to counterbalance the strength of the winning party.

Renzi, obviously, does not buy this argument. In his view, the electoral and constitutional reforms are aimed exactly at reducing veto powers in policymaking – which he considers the true cause of Italy’s long-lasting decadence. Moreover, he believes that the party minority’s real goal is just to stop his reforms, forcing him to compromise. A compromise will probably be reached, but not at the price of reintroducing a directly elected senate. A scenario in which the reform passes with a group of Democratic senators voting against or abstaining, like for the vote on the electoral system, is becoming more and more likely as times passes without an agreement.

Besides the constitutional reform, Renzi is once again positioning himself at the centre of the political arena, trying to gain votes both on the left and on the right. So, on the one hand the Democratic party (PD) is strongly pushing to pass a bill on civil partnerships, while on the other hand Renzi has announced that the government wants to permanently abolish the property tax for all first homes.

The first measure would hardly be considered a leftwing one in most European countries. However, in Italy the centre right has always followed the Catholic church’s opposition to any recognition of same-sex unions; within centre-left circles, these proposals have always had more support, though leftwing majorities have also been unable to pass such laws (Catholics have always been decisive in centre-left governments).

Renzi, like Romano Prodi and other Italian centre-left Catholics, firmly believes in the separation between state and church, and does not think that religious beliefs can inform the state’s legislation. However, there are many Catholic MPs outside the PD who support the government but do not want to support the civil partnership bill. At present, it is still uncertain whether the bill will be passed by the majority alone (perhaps in more watered-down formulation) or whether the PD will seek the support of opposition parties, like the more radical Left Ecology Freedom (SEL) or Beppe Grillo’s Five Star Movement, to get the bill approved. Renzi seems determined to pass this bill and he hopes this will help him reconnect with those voters from the left that gradually abandoned the PD in the last year.

The abolition of property tax for all first homes is on the other hand a measure that, since 2006, has strongly characterised the centre right. The tax has been abolished and reintroduced twice since 2008. When Renzi promises to abolish it again and forever, he uses the same arguments Silvio Berlusconi used: that 80 per cent of Italians own a house, and that high taxes on real estate have depressed the building sector. Yet, he risks a clash with his party and with the European commission. Many people in the PD have maintained the same opinion as before on the property tax: that it is a ‘fair’ tax, the burden of which is borne more by the rich than the poor (because they have bigger houses), and which has a smaller impact on growth than other taxes. These are the arguments the centre left has always used against Berlusconi on this issue.

The commission is also concerned about the overall effect of this measure. Its opinion in recent years has always been that Italy needs to reduce taxation on those who invest, produce and employ workers, rather than on real estate and other non-productive investments. Some rumours have already begun to circulate about the commission’s lack of enthusiasm for Renzi’s promise. However, the prime minister replied that it is up to the Italian government to decide which taxes it will cut. Renzi knows how unpopular the property tax is, and he knows its abolition could play a big role in next spring’s local election. This seems to be his most powerful argument.

Mattia Guidi is a post-doctoral fellow at the Department of Political Science of LUISS Guido Carli in Rome

This article is a contribution to State of the Left – Policy Network's regular insight bulletin that reports from across the world of social democratic politics

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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