Italian Unions Lay Out Lower Tax Proposals

by Ulrika Lomas, Tax-News.com, Brussels

17 September 2010

Italy’s largest trade union federations, CISL and UIL, have asked the government to meet with all interested parties with the objective of formulating and putting into action fiscal policy measures that would sustain the country’s economic recovery.

The policy measures they would like to see include immediate reductions to the tax burden on employees, pensioners, families and companies, that would “make a decisive contribution to a revival in internal demand and consumption, which is indispensable for the Italian economy to return to growth.”

Firstly, with regard to individual income taxes, CISL and UIL request that personal tax allowances should be increased for employees and pensioners, and that the income tax rates should be reduced. The lowest rate of tax, for those earning less than EUR15,000 (USD19,500) per year, would be cut from 23% to 20%, and the middle range rate, for those with annual earnings between EUR28,000 and EUR55,00 would be lowered from 38% to 36%.

The government is also requested to look at the instances where individuals are, because of their low income, unable to use all of their tax allowances. The trade unions believe that this phenomenon could be eliminated by means of some kind of “negative tax”. They would also look for tax allowances to be automatically linked to the consumer price index to neutralize the operation of fiscal drag in future years.

A reduction in the tax burden on companies, according to CISL and UIL, should be used to increase the competitiveness of the Italian corporate sector, particularly given the recovery in foreign demand. However, they believe that such a reduction should be allied with measures to encourage technological innovation and productivity.

They are aware of the necessity to reduce government expenditure on the other side of the equation, and have welcomed the government’s deficit reduction package which was passed before the summer break. CISL and UIL hope that the moves made towards fiscal decentralisation, and the balancing of local expenditure and taxation, will be used to stimulate less local bureaucracy and a more efficient use of local resources, thereby contributing to a lowering of tax burdens.

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