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Italian Business Would Trade Incentives For Tax Reduction

by Ulrika Lomas, Tax-News.com, Brussels

03 October 2012


The President of Confindustria (the Italian industrial federation), Giorgio Squinzi, has pronounced that, as Italian businesses are currently being destroyed by the high level of taxation in the country, they would be willing to give up all existing corporate tax incentives in return for a tax reduction.

Squinzi pointed out that it has been calculated that, out of the EUR30bn (USD38.7bn) of corporate fiscal incentives that are provided each year, only EUR3bn are received by private companies. At the same time, he added, businesses are “dying of taxation”, with corporate tax burdens reaching 57%.

Taking account of that “monstrous” level of taxation, he said that, in the view of Confindustria, the government could “take away whatever incentive it wants, as long as it cut taxes at the same time to let Italian businesses compete on international markets”.

In particular, he looked for the elimination of IRAP – the regional tax on production – which, he said, is anathema as its incidence is greater on those companies that use more research and development in their businesses.

Economic Development Minister Corrado Passera has immediately replied, saying that the government is already working on a restructuring of tax incentives, by looking at each one in turn and “trying to see if there could be a better way to make the system more competitive”.

In the past, Passera has said that the government was aware that it needed to create the conditions for economic growth by reducing tax burdens, and to do that as quickly as possible. However, he has restricted his promises to a progressive reduction in taxes, but only after the country’s fiscal deficit problem has also been resolved.

TAGS: tax | economics | business | tax incentives | fiscal policy | corporation tax | Italy

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