Oration
Chancellor
Like many of my colleagues, I have often had the pleasure to recommend a student of mine for the award of a degree, but I am now enjoying the much rarer experience of introducing to graduation one of my teachers. As an undergraduate I was very lucky to have the opportunity to attend Vincenzo Visco’s lectures on Public Finance at the University of Pisa.
Vincenzo Visco was in Berkeley at the onset of the students’ movement. He spent the next year here in York, where he gained an MSc in economics, having sat his examinations in this very hall. Like many in his generation, he had a keen interest in social justice. But unlike many in his generation he has maintained this interest throughout his life, and he has also managed to do something about it; indeed, to do rather a lot about it. As a young academic he carried out a seminal analysis of income distribution in Italy. This led to his subsequent research into personal and corporation income tax. He was also a consultant to economic ministers, and wrote regularly in national newspapers.
We left Pisa together, I to continue my studies in Britain, he to enter Parliament in 1983. Ten years later, he became a cabinet minister. He held office just for one day, in what must count as one of the shortest ministerial tenures in history, during which, nevertheless, he introduced two important pieces of legislation. He and his party colleagues resigned in protest at the Parliament’s decision not to charge former Prime Minister Craxi for corruption and other assorted crimes. Vincenzo Visco had to wait four years to re-enter the cabinet. This time he was in government for five years, first as Ministro delle Finanze, then as Ministro del Tesoro. These posts shared the duties performed by the Chancellor of the Exchequer in Britain, and it was thanks to Vincenzo Visco’s reforms that they are now unified under the same Ministry. The underlying theme of his teaching and his research has always been the need to ensure that the tax burden be spread according to principles of economic efficiency, social justice and equity. Tax avoidance undermines these principles, and Vincenzo Visco has always seen tax avoidance as one of the enemies of both economic efficiency and social justice. As a cabinet member, he had the opportunity to put this conviction to the test of real life practice, and he made the fight against tax evasion one of the centrepieces of his policy.
However, it takes courage and intelligence for a minister to crusade relentlessly against one of a nation’s most popular sports. Many years of practice, combined with an unsurpassed Italian flair and panache, have led to extreme ingenuity in tax avoidance. It is a battle which may have some headline catching moments, such as the prosecution of tenor Luciano Pavarotti, or the blockade of tax heaven San Marino, but otherwise it must be fought in unglamorous details: intelligent reforms and the day-to-day consensus building with the representatives of economic agents, such as small firms, professionals, individual entrepreneurs, shopkeepers and so on, necessary to make the reforms work: people cannot be bullied to pay tax, they need to be persuaded. To achieve this, Vincenzo Visco has immensely simplified the Byzantine Italian tax system: the paperwork associated with tax reporting is vastly reduced, forms are simpler and are submitted electronically, refunds are paid in weeks rather than years; costs are lower and economic efficiency higher, both for the taxpayer and for the administration. During his tenure, Vincenzo Visco reduced personal income tax and social security rates, lowered corporation tax by 15 percentage points, and abolished 24 separate taxes. He also introduced accepted principles of good administration such as the transparency of destination, the simultaneous reduction of the number of tax deductions and exemptions and the tax rates, and the creation of separate agencies responsible for the separate activities of the ministry.
His reforms, his tax cuts, his fight against evasion, and his simplification of the taxpayer’s life have increased the economic efficiency of the tax system, leading to higher tax receipts (to the tune of 4.5 per cent of GDP), with no increase in the tax burden. These higher receipts were returned to the taxpayer in the form of tax reductions. This virtuous circle of lower taxes, leading in turn to higher economic growth, and hence to increases in tax receipts, and then to even lower taxes, was unprecedented in Italian history; but it has, sadly, been broken by the present government.
Millions of British tourists also have something to thank Vincenzo Visco for. He and his government colleague Azeglio Ciampi steered the Italian economy through the tough rules required to adopt the Euro: those confusing trailing zeros of the lira are a thing of the past. In the period leading up to the adoption of the Euro, the Italian government earned the respect of the other European governments, and so Italy played an important role in the shaping of European monetary policy; this was recognized in the appointment of their Prime Minister, Romano Prodi, as president of the European commission.
Vincenzo Visco is now a full-time opposition front bench MP, but he continues to see himself primarily as an academic; he teaches at the University of Rome, unpaid, from 8 till 9 in the morning, three times a week, eight months a year. And even during his tenure as Finance Minister, he felt sufficiently an academic to forgo – temporarily – the company of Gordon Brown and his other fellow EU finance ministers who were meeting in York, and instead accept an invitation from our economics department to give a lecture to staff and graduate students.
Chancellor, few academics have maintained Vincenzo Visco’s rigour in their approach to policy making, and even fewer have had as profound and long-lasting an impact on social justice and economic efficiency, and on the lives of ordinary citizens as he has. It is therefore an honour and a pleasure to present to you Vincenzo Visco for the degree of Doctor of the University, honoris causa.