The Italian government has decided to postpone the phasing out of a regional business tax known as IRAP until next year because it cannot agree on how the tax cut should be funded.
According to Prime Minister Silvio Berlusconi, the tax will be reduced in three phases, starting in 2006 and continuing into 2008.
"It was impossible to do otherwise because until now we have not found agreement," Berlusconi stated following a meeting between government officials and trade union leaders on Tuesday night.
The government had initially planned to cut the tax by EUR12 billion (US$14.5 billion) over three years. However, with Italy facing yet another breach of the eurozone's budget deficit limit of 3% of GDP, the amended proposal will cut the tax by EUR6 billion.
The European Union expects Italy's budget deficit to hit 4% in 2005, rising to 5% in 2006.
.Tags: Italy | Italy
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