Italian public expenditure is the total expenditure incurred by the state and public bodies (regions, municipalities, etc.) to finance community services. In theory, it is the ‘spending list’ that should reflect the country’s priorities and objectives. In practice, for Italy, it can be effectively described as a runaway train: a machine of outlays that is difficult to control, assess and manage.

This ‘train’ is the main reason why the tax burden in Italy is among the highest in Europe. A significant proportion of spending is inefficient, not providing taxpayers with an adequate return for the sacrifice required.

Numbers that make your wrists shake: the gap with Europe

The macroeconomic data paint an alarming picture that highlights the Italian anomaly:

• Expenditure vs. growth (2000-2025): Italian public spending grew 4 times faster than the European average, while GDP growth was 4 times lower than the European average.
• Public debt and interest: For every €100 of public expenditure, €8 is spent on interest payments on the debt alone, a figure that in macroeconomic terms absorbs about 4% of GDP. This is €8 that is subtracted from investment, health and education.
• Decades of imbalance: Since 1995, public current primary expenditure has grown by an average of +2.6% per year, compared to real GDP growth of only +0.7% per year. This means that social spending and purchases of goods and services have increased at almost five times the rate of our income-generating capacity.
• The Debt Giant: The public debt exceeds THREE THOUSAND BILLION euros, bringing the Debt/GDP ratio to 135% (about €50,000 of debt per citizen).

Public spending is not an unlimited or alien resource: it is fed by the taxes of all of us. If the country does not return to income generation at a much faster rate, maintaining the current (and increasing) level of expenditure will become unsustainable.

Inefficiencies in the ‘wagons’: Participations, Health and Transport

The most glaring example of imbalance lies in the management of income and expenditure:

• Assistance vs. IRPEF getitto: In 2024, IRPEF revenues were about EUR 235.5 billion. In the same year, transfers from general taxation alone to cover the welfare and social security system (not covered by contributions) reached the monstrous figure of approximately EUR 180 billion. Despite the enormous increase in social spending (about 1,300 billion in 10 years), the percentage of households in absolute poverty has almost doubled.
• Healthcare: The sector, which absorbs around 85% of the regional budget, is held back by a system of public-private accreditation in total discretion, without competition or competition, which keeps outgoings unchecked.

Added to this are the inefficiencies in state-controlled companies:

• Mysterious subsidiaries: chaos reigns over the number of investee companies in Italy: for ISTAT there are about 5,000, while for the Ministry there are about 8,000. A ‘laughable’ difference, were it not for the glaring inefficiencies they manage.
• Monstrous absenteeism: Subsidiary companies such as Atac (Rome’s public transport system) record absenteeism rates of up to 1,300 out of 10,000 employees per day, while AMA (Rome’s waste collection system) runs at around 20 per cent. These inefficiencies are paid for with public money.
• Cost of public transport: in Italy the average cost per km is 5€, compared to a European average of 3€/km. As far as revenue is concerned, only one third comes from tickets, while the remaining two thirds are covered by public funding.

Civil servants, regional waste and revenue shortfalls

Although Italy has fewer civil servants per 100 inhabitants than other European countries (Germany, Spain, France), regional inefficiencies are evident:

• Regional waste: The Corte dei Conti’s analyses show waste in personnel in regions such as Lazio, Liguria and Calabria. The alignment of personnel to the expected average would lead to total savings of more than EUR 900 million between the three regions.

All these outgoings are even more dramatic when one thinks of the lost revenue due to tax evasion and avoidance.

• Tax evasion: Total (tax and social security) evasion amounts to about 100 billion euro. VAT evasion alone (the ‘black’) is worth 31.8 billion, and IRPEF evasion from the self-employed and small businesses is 32.5 billion.
• Capital abroad: an estimated 200 billion ‘Italian’ euro is held in tax havens.
• Incapients: Approximately 20 million potential taxpayers declare themselves to be incapacitated or outside the ‘taxable’ brackets.

The anti-crisis solution: back on track

The country needs to be ‘turned inside out’ (and leave out the financial burden of measures such as the Superbonus, whose last instalment of 40 billion will accompany us until 2026).

We do not need magic recipes, but drastic and courageous choices to streamline spending, measure and evaluate every public policy and reform processes:

1. Liberalisation and competition: Free the country from corporations by promoting competition, particularly in the health sector and public services.
2. Administrative mergers: Promoting mergers between small municipalities to streamline administrative expenditure and increase ‘productivity’.
3. State focus: the state must return to doing a few things well instead of doing many things badly, eliminating programmes that have not produced concrete and verifiable results.

Some will take it badly for sure, but the state has to do a few things well instead of doing many things badly… in some cases very badly indeed