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IMF Urges Italy To Lower Labor Taxes

by Ulrika Lomas, Tax-News.com, Brussels

09 July 2015


The International Monetary Fund has said that Italy needs to reduce its high taxes on labor and capital to boost economic growth and cut debt.

The country's 2015 Budget cut labor taxes by 0.7 percent of gross domestic product (GDP) but the labor tax wedge remains above the median for OECD members, the IMF said.

The Fund said in its 2015 Article IV Consultation report for Italy that the ongoing spending reviews, which are targeting savings of EUR10bn (USD11bn) in 2016 and EUR17-18bn by 2018, are crucial to raising the efficiency of public spending and creating room for further labor and capital tax cuts.

The report also called for the full implementation of the delega fiscale, which contains measures aimed at simplifying the tax system.

It also recommended stronger efforts to curb tax evasion, including by expanding the use of Italy's anti-money laundering framework to pursue those perpetrating tax crimes.

The IMF concluded that the Government's planned fiscal consolidation of 0.25 percent of GDP in 2015 is appropriate.

TAGS: compliance | tax | economics | tax compliance | fiscal policy | revenue guidance | gross domestic product (GDP) | budget | International Monetary Fund (IMF) | tax rates | Italy | tax reform | individual income tax | Tax | Tax Evasion

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