The tax reform “must facilitate the increase in the employment rate”. This seems to be the priority of the government which is preparing – by the end of July – to present a delegated bill on tax reform. This was stated by the Minister of Economy, Daniele Franco, during the hearing on issues relating to the tax reform that takes place in the Finance committees of the Senate and Chamber. As for Irap, the minister says that, many tweaks and revisions, which have changed the original structure, the maintenance of this tax “no longer appears justified, there is a need for simplification”. The minister also replied on the patrimonial: “I think I have already said that it is not in the document”.
Tax wedge
“In Italy – the minister pointed out – the tax wedge is particularly high” and “the high levy on dependent work does not favor the employment rate which in Italy is equal to 59%, against 76% in Germany and 75 % of Great Britain “. Hence the need to also use the fiscal lever to encourage the increase in employment.
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“Possible VAT revision, even with the same revenue”
As regards the value added tax, the commissions suggest redefining “the regulation for the simplification” of VAT and “a possible reduction of the ordinary rate: I would say that the simplification and above all the increase in the efficiency of tax through reduction of evasion and avoidance can also suggest broadening this perspective by not excluding that the delegated legislator can act on the level of reduced rates and the distribution of tax bases between the different rates, interventions that can also take place with the same VAT revenue ” .
“Taxes cannot be changed one at a time”
The tax system “needs a broad and organic reform”, “it is not a good idea to change taxes one at a time” warns the Minister of Economy. “The fundamental pillars of the system, the progressive personal income tax, and the value added tax remain valid, but need a profound renewal of their characteristics and their functioning,” he adds.
“For a structural decrease in taxes, an expense review is needed”
“If you intend to reduce the tax burden in a structural way” you must “act to contain public spending on GDP”, an action “facilitated by an increase in the efficiency” of spending programs, explains Franco, underlining that “in the absence of an intervention coherent on expenditure ”, it is possible to intervene to make the system“ efficient and fair but the structural reduction of the tax burden cannot in itself be pursued ”.