This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
  • Delicious




Italy's Budget Will Include Bigger-Than-Expected Tax Cut Package

Ulrika Lomas, Tax-news.com, Brussels

28 September 2000

At the end of August, Italian Finance Minister announced a tax-cutting programme worth billions, vowing to slash taxes by more than ITL 36 trillion between now and 2001, with the figure of ITL 50 trillion being forecast over a four year period to 2004. At the time he said he would ensure that his tax cuts are at least as large as those laid out by euro-zone partners Germany and France. Now the Italian government appears to have gone one step further, announcing this week that it would be making a bigger-than-expected package of tax cuts in its budget for 2001 and saying it would give Italians a "fiscal bonus" of at least ITL 22 trillion.

The fact that there is a general election looming next April is undoubtedly the reason for the bigger tax cut package. It is essential for the Italian government to lure voters, especially given that centre right leader Silvio Berlusconi is leading the polls. So Giuliano Amato, Italy's prime minister, has issued a mouthwatering statement that tax cuts for families and companies 'will not be lower than ITL 20 trillion.' He said the remaining ITL 2 trillion would go on measures aimed at reducing the cost of fuel.

When tax cuts were first announced in August, they were hailed by economists as both "necessary" and "realistic". This week's announcement has taken the same economists by surprise and until recently, the government had indicated that reductions in the budget, due to be agreed by the cabinet later this week, would amount to no more than ITL 15 trillion.

Lorenzo Codogno of the Bank of America in London commented: 'This is a much larger figure than we had expected. The rise in the oil price and interest rates and the signs of a slow-down in the Italian economy had led us to think that the fiscal bonus would be far more modest.'

The forthcoming Italian budget has long been seen as the last big chance for the government to stop Berlusconi's centre-right party in its tracks. But politics aside, the Italian government genuinely has more money to play with. Italy has seen an impressive increase in revenues. As a country which often serves at the backdrop for high-profile tax evasion cases, its recent fiscal receipts serve as an indication that more citizens are digging into their pockets, this time to the benefit of other sections of Italian society.

.

 

 






Write a comment