Italy still has a big challenge in terms of sorting out its public finances even though the country's economic recovery is less fragile than previously, the Audit Court said on Wednesday. "Despite the initial uncertainty, the performance of the Italian economy seems to have changed direction towards a less fragile, more qualitative expansion," read the State auditor's 2017 report on public finances. It said restoring public finances to health was "harder" for Italy than other European countries. It also stressed, however, that this was "necessary given the high debt level". Italy's labour-tax wedge is 10 percentage points over the European Union average, the Audit Court said. The labour-tax wedge is the difference between workers' take-home pay and the total cost to firms to employ them. The State auditor said that 49% "is deducted for contributions and taxes". It also called for the tax-to-GDP ratio to be reduced, saying the current situation "does not help the fight against the underground economy and tax evasion".
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