In the picture: professors Dino Rizzi and Anna Marenzi

The Italian personal income tax (Irpef) tax credits rewards the richest part of the population, increasing the health inequalities between Italian families. Economists of Ca' Foscari University of Venice and of Pavia University have simulated several scenarios, remarking how the most fragile categories - with the least resources to face o prevent the social consequences of illness - are penalized by the current tax credits system. The credits are higher for the classes with higher income level, whereas those with a lower income level may not get any.

"Getting read of the credits is not desirable, but it is important to analyze how to avoid undesired effects from this very meaningful tool - explains Anna Marenzi, professor at the Department of Economics of Ca' Foscari and, together with Cinzia Di Novi (Department of Economics and Business Sciences, Pavia University) and Dino Rizzi (Department of Economics, Ca' Foscari University) co-author of the study published by the European Journal of Health Economics.

Currently in Italy medical expenditures directly supported by citizens (both generic and specialized) can receive deductions of 19% for income tax for the individuals who have incurred healthcare expenses in excess of a deductible of 129,11 euros.

Among the tested scenarios run with the microsimulation model 'Betamod' (developed in the Department of Economics of Ca' Foscari University) also emerges a more equal tax credit solution, based on income. This solution becomes a policy suggestion within a possible reform of the system. It foresees a 26,5% tax credit up to incomes reaching 15 thousand euros per year, then a decreasing rate, which is nullified for incomes above 75 thousand euros per year.

"Simulations run with this scheme show how a reduction of inequalities in health related to income could be possible, all revenues being equal", says the professor.

The income variation linked to taxation can indeed influence individual health conditions. The redistribution effect of tax credits for health expenditures has been for long analyzed in-depth, but little did we know about the effect of tax credits for health expenditures on health inequality of Italian families.

The relevance of tax credits is confirmed by over 17 millions of tax payers who benefited from it in 2015, for almost 17 billion euros. Furthermore, from 2003 to 2015 the share of concerned tax payers grew from 28% to 43%. Possible causes of growing demand for private institutions may be found in the ageing of the population, the increase of the medical fee and of the queues waiting to access public structures.

Enrico Costa