Italians Reach 'Tax Freedom Day'

by Ulrika Lomas, Tax-News.com, Brussels

07 June 2011

CIGA of Mestre (the Italian association of sole traders and small businesses) has calculated that June 5 was the date that Italian workers would have paid all of their taxes and contributions for the 2011 tax year.

Giuseppe Bortolossi, CGIA’s Secreatry, announced June 5 as the day that Italians “stopped” paying the taxes that would be due on their 2011 wages and salaries. In other words, as in 2010, it took 155 days in the year, or more than 40 days more than the date registered in 1980, to reach the point where Italians are working for themselves, and not for the Italian Revenue Agency.

To work until that far into the year, concluded Bortolussi, gives some idea of how excessive is the Italian tax burden, which, on “honest taxpayers”, reaches up to 52%, and which has few equals in the rest of Europe. Only Sweden and Denmark, he said, have a level of taxation greater than Italy.

In Bortolossi’s opinion, the best way to reduce the burden of Italian taxes would be through a reduction in public spending, a result which will probably be obtained through the current introduction of fiscal decentralization to municipal and regional authorities. He pointed out that the European experience has been that federal states have the least public expenditure and the best quality of state services.

On other hand, Confindustria, the Italian business federation, has also published figures on the level of taxes on companies. It has calculated that an Italian company with a net profit of EUR380,000 (USD527,000) would have, instead, earned around EUR600,000 if it was resident in Spain, because of the 29% effective corporate tax rate ruling in Spain, rather than the 58% rate suffered in Italy.

Although Confindustria has, for some time, led a campaign to reduce Italian taxation on both employers and employees, this time it has let the figures tell the story. While a company with a turnover of EUR27.7m, 180 employees, and a pre-tax profit of EUR986,500, would have a post-tax profit of 8% lower in France than in Italy, it would be left with 20% more in Germany, 37% more in the United Kingdom and 58% more in Spain.