The Italian government will cut tax by a total of €12 billion in 2005 and 2006, according to Prime Minister Silvio Berlusconi.
Speaking on Saturday, Berlusconi also pledged further reductions in tax to take place in 2007 and 2008.
The government had initially planned some €13 billion in tax cuts over the period 2005 to 2007 but slow economic growth has led to concerns that the plan may be unfeasible. Italy remains under pressure to keep its budget deficit below 3% of gross domestic product to stay in line with the EU’s Growth and Stability Pact.
As a result, the Prime Minister, facing re-election in 2006, has been forced to drop some of his more ambitious proposals, such as reducing the number of income tax brackets from five to two.
Standing in for the former finance minister Guillo Tremonti in July, Berlusconi told the EU that Italy will also drop tax breaks for banks and insurance firms so that the country can meet its budgetary targets.
.Tags: Italy | Italy
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