The government's tax reform won
definitive approval in the Lower House on Friday, with 184 votes
in favour and 85 against.
The most important part of the reform is the reduction of the
number of income-tax bands from four to three as part of the
process of moving towards the introduction of a flat tax for all
workers by the end of the current parliamentary term.
Italy has a 15% flat tax, but it currently only applies to
self-employed people earning up to 85,000 euros a year.
The current income-tax tax bands are set at 23% for incomes of
up to 15,000 euros a year, 25% for up to 28,000 euros, 35% for
up to 50,000 euros and 43% for earnings above that.
The reform will be fully operative within two years thanks to
subsequent enabling laws.
Among other things, the reform introduces a system for companies
involved in tax disputes to be exempted from criminal charges if
they cooperate with the tax authorities.
It also gives incentives for wealthy people living abroad to
take residence in Italy.
It gives taxpayers the opportunity to enter an agreement in
which they will not be subject to checks on their earnings for
two years if they agree to pay a given amount of tax set by the
authorities.
It also envisions the abolition of the IRAP regional business
tax.
"We have worked on all the different types of tax, withing
abandoning the concept of progressiveness," Deputy Economy
Minister Maurizio Leo told the Lower House on Friday.
"We all have to be aware that our tax system penalizes
taxpayers.
"The famous four bands make life difficult for taxpayers and we
want to sweeten the tax-band curve, starting with three to
gradually get to a flat tax.
"We have to change the face of the tax system and we want to do
this, without lowering the guard on the fight against tax
evasion".
Photo: Deputy Economy Minister Maurizio Leo.
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