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Italy Studies Wealth Tax

by Ulrika Lomas,, Brussels

14 November 2012

Italian Prime Minister Mario Monti, speaking at a conference in Milan, has sparked a controversy over whether or not the government is thinking of imposing a wealth tax.

Monti caused the controversy when he indicated the government was studying the possibility of a general Italian tax on wealth, but that it would not be introduced overnight 'as much depended on how it was structured and how it was utilized', for example, either as a one-off measure or as an annual tax.

He specified, however, that the government does not want to turn off investors with an inequitable tax, and reminded his audience that, in the past, difficulties have been seen in imposing a wealth tax in Italy given that all of the necessary information on the ownership of assets is unavailable.

With leading politicians immediately replying that they hoped that the possibility of a wealth tax was merely a 'study', the Prime Minister's office had to issue a statement, underlining that, while Monti had specified that he was not against a 'modest' general tax on assets, he had not announced that such a tax would actually be imposed.

It was stressed that he had limited his comments to explaining that the tax-raising measures which his government has taken to date have had to be imposed on incomes and consumption, as it lacked the necessary information on assets held in the country and also wanted to avoid a massive escape of capital abroad. Rather than an announcement of future policy, Monti had, it was said, used it merely as an explanation of the decisions on taxes that the government has already taken.

Monti's office also pointed out that, instead of a general wealth tax, the government had acted where it could on specific assets held by Italy's wealthiest citizens, such as the imposition of a tax on luxury cars, aircraft, helicopters and boat moorings.

In addition, during his speech, Monti went on to compare the fight against tax evasion in Italy to a real war. He justified the choices the government has already made in confronting tax evasion - from the raids on holiday resorts, clubs and stores, to the limit on payments in cash and the system for cross-checking individual incomes and spending - although they have caused attacks on tax collectors and tax authority offices.

TAGS: individuals | compliance | Wealth | tax | economics | tax compliance | fiscal policy | luxury tax | tax authority | Italy

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