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Italian Tax Cuts Promised In Upcoming 2014 Budget

by Ulrika Lomas,, Brussels

09 October 2013

Following the recent survival of his Government in a parliamentary confidence vote, Italy's Premier Enrico Letta used a television interview to confirm that the 2014 Budget, to be announced this month, will contain proposals to cut tax burdens on both businesses and their employees.

It is said that the Italian Ministry of the Economy and Finances is studying various proposals to reduce tax burdens, which were recently calculated, for example, to reach an average of 46 percent on individuals, based on their tax and social contributions. Letta therefore remarked that tax reduction would be "at the heart" of the Budget.

Letta also assured workers that they would see the benefit within their pay packets next year, while it is expected that tax incentives for businesses will be concentrated particularly on those who take on additional employees. Letta confirmed that, to receive a tax break, those employees would have to be employed full time, and not on a fixed-term contract, while providing jobs for young workers would also be favored.

It has been indicated that the Government's action on tax burdens will total up to EUR5bn (USD6.8bn), to be divided equally between employers and employees, and will be concentrated on a few measures so as to be more visible, rather than spread around a greater number of smaller, policies with a diluted effect.

To pay for the Government's budgetary package, which will also need to provide for the cancelation of December's second tranche of the local property tax for this year, and its abolition in 2014 in favor of a "service tax," the Premier noted that "public spending will have to be further reduced, a well-organized sale of public assets will have to be established, and the recovery of funds from tax evasion will have to be increased."

He added that, with regard to the latter, he was "thinking, above all, of the [Italian undeclared] funds held in Switzerland." He was perhaps alluding to the long-awaited proposed tax treaty between Italy and Switzerland, discussions on which were said to have restarted in July this year.

TAGS: individuals | compliance | Finance | tax | economics | business | tax compliance | property tax | tax incentives | fiscal policy | law | employees | budget | corporation tax | legislation | Italy | Switzerland | tax breaks | individual income tax | Tax | Tax Evasion

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