Italy's spending-review
commissioner Yoram Gutgeld said Tuesday the government would
seek budget flexibility from the European Union again in 2017.
"We requested and obtained the concept of flexibility last
year (for the 2016 budget) and so we will obviously continue on
this path," Gutgeld said.
Separately on Tuesday, Italy's Audit Court said an
economic recovery is underway, but may not have much staying
power.
"On the one hand, the Italian economy appears to have left
the recessive phase behind," the Court said in a public finances
report. "On the other, the recovery is still weak and may have
trouble consolidating. Uncertainties weigh on the 2016 outlook
due to slowing international trade and turbulence on financial
markets".
In its report, the Court said the nation's pensions system
"is balanced, as long as Italy returns immediately - albeit
gradually - to a path of moderate growth".
It added that Italy has the second-highest labor tax rate
in the European Union.
"Tax withholding on job income is equal to 42.8%, almost
eight points above the European average," the Court wrote.
Italy ranks third in the EU in terms of business income
taxation of 26%, or "over 50% higher than the EU average".
The way taxes are distributed in Italy "place a burden on
productive factors (work and business income) that is
significantly higher than that placed on consumption and on
capital," the Court wrote.
It also found that tax rebates and other breaks and
benefits are on the rise, as is their impact on public finances.
Compared to 2011, the Court found "a significant expansion in
both number (of tax breaks, 799) and loss of tax take (313
billion euros)," the Court wrote.
Italy's Audit Court said in a public finances report
Tuesday that intervening on the Value Added Tax (VAT) on goods
and services would be "preferable" to other changes to the
country's taxation system.
Such a measure would be "justified, given that Italy's VAT
take lags behind in the European classification". The Court said
"the priority should be a wide-ranging reorganization of taxable
income" as a way to cut down on what it termed "areas of
erosion" in the tax take.
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