Italian Industry Will Not Pay For Tax Cuts, Assures Berlusconi

by Ulrika Lomas, Tax-News.com, Brussels

06 April 2004

In a bid to reassure the business community, Italian Prime Minister Silvio Berlusconi told a conference of the nation’s industrialists at the weekend that his pledged package of income tax cuts will not come at the expense of cutting incentives for business.

Berlusconi was forced to allay the fears of the industrialists lobby at the annual Confindustria event after a government minister suggested that the tax cuts will be subsidised by cutting “transfers to companies”, worth around EUR19 billion in 2001.

"I've read that business leaders are concerned that the government will cut spending for industry incentives," announced the Prime Minister, continuing: "Don't worry. We will not let industry go without funds."

Berlusconi is facing an uphill task trying to sell the idea of tax cuts given the parlous state of the government’s finances, and whilst the business lobby would appear to support the idea of tax cuts in principle, many have also stated that they must be accompanied by cuts in public spending.

The Prime Minster has also clashed with members of his own governing coalition over economic issues, and the country faces a battle with the EU Commission over a likely breach of the Growth and Stability Pact if the tax cuts go ahead.

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