ROME (Reuters) – Italy’s government will approve a bill on Thursday to cut income and corporate taxes, a draft seen by Reuters showed, while also reducing penalties for tax dodgers who come clean and agree to pay the overdue sums.
Tax evasion is an chronic problem in Italy, costing state coffers some 90 billion euros ($95.54 billion) per year, according to the most recent Treasury data.
The draft shows the government intends to eliminate the risk of criminal convictions for those who settle with the authorities and catch up on missed payments, betting on a cooperative approach with taxpayers.
It also offers small firms and the self-employed the chance to agree in advance how much they should pay to the state in taxes over the coming two years, without fear of inspections.
In its EU-funded post-COVID recovery plan, Italy promised the European Commission to cut the so-called “tax gap” — the difference between potential tax liabilities and the amount of taxes actually paid — to 15.7% in 2024 from 18.5% in 2019.
This implies recouping around 7-8 billion euros over the period.
In Rome’s 2023 budget Prime Minister Giorgia Meloni, who took office in October last year, raised a limit on cash payments to 5,000 euros from a previous limit of 1,000, drawing criticism from some economists who warned of fuelling evasion.
The cabinet is scheduled to meet at 1530 GMT to discuss and approve the bill, Meloni’s office said in a statement.
Looking to overhaul the fiscal system, Meloni aims to reduce current income tax bands from four to three within two years, with the final aim of achieving a single tax rate before national elections in 2027.
The cabinet will consider setting the three bands at 23%, 33% and 43% in the short term, government officials said, adding that a more expensive solution being studied would lower the second band to 27%.
The current income tax levy, named IRPEF, is based on rates running from a minimum of 23% on annual income up to 15,000 euros, to a top rate of 43% on income above 50,000 euros.
In addition, Meloni wants to split the current 24% corporate income tax rate into two by introducing a second lower band at 15% to reward entrepreneurs who create jobs and invest in innovation to boost productivity.
($1 = 0.9421 euros)
(editing by Gavin Jones)
Source: Economy - investing.com
