Italy to present promised EU tax reform framework | World news
ROME (Reuters) – The Italian government said on Tuesday it would present a bill setting the framework for a sweeping tax reform promised to the European Union, overcoming political tensions within Prime Minister Mario Draghi’s coalition.
The bill, aimed at increasing the employment of young people and women, will simplify the system, fight against tax evasion and eliminate many “micro-taxes” which do little for state coffers, according to a project seen by Reuters.
However, the delay is long. Once approved by parliament, it must be implemented within 18 months, says the project.
The bill was initially promised at the end of July as part of Rome’s Recovery and Resilience Plan (PNRR).
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“The tax reform is one of the key elements of the PNRR to remedy the structural weaknesses of the country and is an integral part of the recovery that we aim to trigger with the help of European funds”, indicates a government document accompanying the bill.
The main bone of contention in government was a proposal championed by the Treasury to discount the assessed value of real estate, which is often much lower than actual market values.
This change was recommended to Italy by the European Commission.
However, lawmakers in the Right-wing League and the conservative Forza Italia party of Silvio Berlusconi, the main coalition parties, feared this could lead to higher housing taxes for many taxpayers.
To overcome their resistance, the project foresees that the government will not change current assessed real estate values until 2026.
However, the League still seemed dissatisfied on Tuesday, and its ministers did not attend the start of the cabinet meeting called to approve the bill, sources said.
According to the draft, Italy also plans to align financial investment tax rates with corporate tax in the medium term.
The tax rate on financial investments, with the exception of government bonds, is currently higher than the corporate tax rate (Ires).
The government’s latest budget targets presented last month contain leeway for additional spending of 1.2% of national production, or more than 22 billion euros ($ 25.52 billion) next year.
Much of this will be used to finance tax cuts as part of tax reform, a government source said.
(Report by Giuseppe Fonte, edited by Gavin Jones)
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