Italian Financial Advisers Publish Tax Reform Proposals

by Ulrika Lomas, Tax-News.com, Brussels

29 November 2010

In a document delineating its platform for participating in the government’s present work seminars on tax reform, the CDNDEC, the Italian national council of tax and financial advisors has proposed that the tax taken from the various sectors of the economy should be made more equitable.

Apart from the more equitable and coherent realignment of taxes, CDNDEC’s president, Claudio Siciliotti, also underlined that a greater certainty in the relationship between the fiscal authorities and taxpayers should also be given priority, with a new, better run, tax administration system and with a simplification of the country’s tax regulations.

The CDNDEC’s document insists that a revision of the tax system should be accepted by all economic and political sectors before its enactment, so as to avoid reforms being changed or reversed by successive governments.

In addition, it emphasizes that, if immediate action should be felt necessary to reduce or modify the tax burden on families, businesses or professionals, such decisions should not be left until other considerations in the whole tax system are later decided upon.

In fact, the CDNDEC is proposing, as have others recently, that the tax burden should be re-balanced by decreasing the taxes on income from production and increasing those on income from capital; making sure, however, that incentives for corporate re-capitalization are maintained, possibly by interest paid by companies becoming non-deductible, at least in part.

It points out, for example, that, at present, an individual taxpayer (either employee or sole trader) who declares an income of EUR100,000 (USD132,000) pays a tax rate of 38.45%, while the same income earned as 3% interest on financial capital of EUR5m is taxed at only 12.5%.

To taxpayers in Italy, the CDNDEC says, it therefore appears better not to have to work, if you can own financial assets instead. However, if you have to work, it is better not to declare it.

It also asks for the abolition of the local corporate income tax (IRAP), which increases the rate of tax on non-incorporated businesses, and for companies that create jobs to be given fiscal incentives instead. It adds that, within a greater commitment against tax evasion by encouraging tax transparency within the system, further tax amnesties must not be countenanced.

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