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Italian Tax Revenues Increase, Despite Recession

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2012


Despite the country being in recession, tax revenue collected in Italy still rose in the first ten months of this year, due, above all, to the measures taken since the second half of 2011 to correct the fiscal deficit problem.

In comparison with the period from January to October last year, tax revenue in Italy rose by around 4% in the same period of 2012, increasing by EUR13.6bn (USD17.8bn) to reach a total amount of EUR322.8bn.

Despite the effect of the economic recession on employment, Italian direct tax revenue still increased by some 5%. However, while personal and corporate tax revenues largely held on to their levels of the previous year, the largest rise in direct taxes (by almost 54%) was found from taxes withheld on interest and other financial income, arising out of the harmonization of such taxation at 20% from January 2012.

With regard to indirect taxes, value added tax collections in the first ten months of this year fell by 2% due to the lower levels of consumption in the Italian economy, but tax revenue from fuel taxes rose due to their rate rise to fund the cost of reconstructing the areas affected by recent earthquakes.

Also of note was the additional revenue received due to the payment in July of an annual levy of 0.4% on financial funds declared during previous tax amnesties (which will be increased to 1% in 2012 and 1.35% in 2013).

In addition, during the same period, it was disclosed that the revenue collected by way of further tax audits and controls reached almost EUR5.8bn – a 9% increase over the level in the first ten months of 2011.

The Italian Treasury commented therefore that, despite the economic recession, tax revenues have continued to rise significantly in 2012, due to the measures announced since the second half of 2011 that have come into effect this year.

Apart from the financial income tax reforms, it made special mention of the introduction in 2012 of the new local property tax (IMU), which has been re-imposed on first residences, and which formed the major revenue-raising measure within the government’s "Save Italy" budget finalized in December last year.

The second and final IMU 2012 payment is due on December 17 following finalisation of the rates being applied by each local authority. It is said that the amount due will significantly reduce 2012 Christmas spending in Italy.

TAGS: tax | value added tax (VAT) | property tax | corporation tax | tax rates | withholding tax | Italy | revenue statistics | tax reform | individual income tax

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