Premier Giorgia Meloni has hailed the framework for a reform of Italy's tax system approved by her cabinet on Thursday as a historic move.
Under the plan, Italy's income tax bands will be reduced 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, which will be fully operative within two years, envisions three tax rates of 23%, 27% and 43%; or 23%, 33% and 43%.
The government plans to gradually abolish the IRAP regional business tax and lower the IRES business tax for companies that make investments or recruit new workers.
The aim is also to eliminate value-added tax on a range of essential goods.
The reform will be funded in part by a reduction in the number tax expenditures.
It will also reduce the criminal penalties for people who are unable to pay their tax bills.
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