Italian Opposition Considering Capital Gains Tax Hike

by Ulrika Lomas, Tax-News.com, Brussels

10 March 2006

Italy's conservative government has clashed with the centre left opposition, led by former European Commission president Romano Prodi, who revealed earlier this week that his coalition is considering increasing the rate of capital gains tax on certain financial instruments.

Speaking on Italian television on Tuesday, Mr Prodi stated that he was thinking of taxing capital gains at a rate of 20%, which would mean a tax hike on the sale of government bonds, currently taxed at 12.5%.

Other types of investment are taxed at 27%.

However, Prodi stated that his coalition is "still thinking about" the proposal.

Nonetheless, Prodi's admission that he was mulling a tax hike was seized upon by the government of Silvio Berlusconi, which is planning to keep such tax rates on hold.

“In my home we call this a wealth tax. It is a wealth tax on the money of poor people," Finance Minister Giulio Tremonti was quoted as stating by the Financial Times.

The latest opinion polls for the election, to be held in April, suggest that Berlusconi's coalition is trailing the opposition.

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