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Italy To Prioritize Tax Cuts To Boost Economy: Padoan

by Ulrika Lomas,, Brussels

26 September 2014

Italy's 2015 Budget Bill (legge di stabilità) will include tax cuts, despite the challenge faced by the Government of reducing the country's fiscal deficit, Italy's Economy and Finance Minister, Pier Carlo Padoan, told Italian media following his return from the G-20 Summit in Australia.

Discussing matters being considered by parliament, he said that while employment law reforms are "an essential part of the Government's strategy to return to economic growth and increase jobs, they need to be joined by fiscal measures, such as a reduced tax burden."

Padoan added that, following the EUR80 per month individual income tax deduction, which was introduced in May this year, and the ten percent cut in the rate of regional tax on production (IRAP), the Government has been examining whether there is space for another tax reduction for businesses in the Budget Bill, which is to be announced in October.

Italian Prime Minister Matteo Renzi had indicated earlier this month that there are two options: either a decrease in social security contributions or a further cut in the IRAP rate. He said at the time that reduced taxes on companies would be funded by public spending cuts.

Renzi had also pointed out that the Government's hands are tied on fiscal matters by the gloomy forecast for Italy's economy, with stagnant growth predicted for 2014.

Padoan confirmed that the economic situation makes it difficult to keep the country's deficit within the three percent of gross domestic product (GDP) limit agreed with the European Commission, but he said the Government must also prioritize economic growth, and further tax cuts are an essential part of that strategy.

TAGS: Finance | tax | economics | business | European Commission | fiscal policy | law | gross domestic product (GDP) | budget | corporation tax | tax rates | social security | Italy | individual income tax | Europe | Economy

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