Direct Taxes Slow Fall In Italian Revenue Receipts

by Ulrika Lomas, Tax-News.com, Brussels

14 August 2009

Largely due to a rise in direct taxes, there was a further slowdown in the rate of decrease in Italian tax receipts in June 2009, as well as an improvement in the country’s fiscal deficit.

In the six months from January to June 2009, total tax receipts in Italy fell by only 1.9% compared to the same period last year. In May, the reduction over the first five months of the year had been seen at 3.4%, while back in February it had been a poor 6.6%.

For the first time in 2009, receipts from direct taxes showed an increase. In the first half of this year, compared to the first half of 2008, personal and corporate income taxes (IRPEF and IRES) rose by 1.7%. Indirect taxes, however, decreased further by a net 6.3%, with revenue from VAT (representing more than half of indirect taxes) still falling by almost 11%.

There was also a sharp rise of EUR2.2bn (equivalent to 19%) in revenue received from the Revenue Agency’s efforts against tax evasion.

Italy’s public sector deficit is beginning to show signs of improvement; having previously grown month-by-month, the deficit in June stayed largely unchanged. In the first six months of 2009, its cumulative rise has been EUR89.7bn, or 5.35%.

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