Italian Opposition Proposes Fiscal Package

by Ulrika Lomas, Tax-News.com, Brussels

04 June 2010

Following the announcement of the Italian government’s fiscal package during the previous week, the main opposition party’s president and ex-Premier, Antonio Di Pietro, has presented his alternative proposals.

During the previous week, the government introduced a fiscal package amounting to EUR24bn (USD29.4bn) over the next two years, concentrating on reducing public expenditure and continuing measures against tax evasion. Di Pietro has now announced proposed measures totalling some ERU65bn over the same two years.

However, in contrast to the government’s measures, the opposition’s plans are intended to both contribute to a reduction in the country’s budget deficit and to promote the economic recovery. Di Pietro expressed the view that the government’s measures would, instead, risk slowing down any such recovery.

The total package, worth EUR40bn in 2011 and EUR25bn in 2012, is therefore divided between an amount of EUR33bn to reduce the budget deficit and EUR32bn to assist the recovery, particularly by reducing the tax burden on employees and small and medium-sized enterprises.

The additional resources would be found from offsetting tax measures (EUR28bn) and reductions in public expenditure (EUR37bn). The EUR32bn of those resources allocated to the recovery would be divided equally between tax reductions for individual taxpayers and for companies.

Taxes would be raised on “speculative income,” including a 20% capital gains tax on financial instruments (with the exception of government bonds) and an additional penalty fee of 7.5% (to make a total of 12.5%) on funds regularized through the tax amnesty. The latter could be expected to produce an extra EUR7.5bn in tax revenue, claims the opposition.

The tax reductions for employees and families would consist of an increase in tax allowances, a lowering of personal taxes on low and medium incomes and pensions, and an extension of social security. On the other hand, the tax benefits for businesses would be allocated to a reduction in employee costs and would permit the payment of value-added tax when received, and not in advance as is currently the case.

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