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Higher local taxes raising total burden, says Audit Court

Southern Italy "penalized" by reliance on regional tax base

06 March, 14:23
Higher local taxes raising total burden, says Audit Court (ANSA) - Rome, March 6 - Higher local government levies have been "the driving force" behind a dramatic rise in the tax burden of Italians, the head of the national Audit Court, Raffaele Squitieri, said Thursday.

He said local taxes - which have risen by 130% - accounted for about 80% of the increase in Italy's tax burden to an average of 44% from a previous 38% between 1990 and 2012, he said.

The audit court blamed fiscal laws that have seen the national government gradually transfer more tax authority to the regions, adding these have "penalized" the country's less wealthy south where the tax base is relatively small.

In a document presented to parliamentarians, the court said that tax policies should be adjusted to take account of regional differences if they are to be equitable.

Poor regions are sometimes forced to boost taxes to pay for basic services such as health care, but the effect of raising the tax burden is damaging to the overall regional economy and in turn, erodes the tax base, Squitieri said.

The result is, "a vicious cycle focused particularly in the South".

The new government of Premier Matteo Renzi has talked about taking back some of the powers that had been downloaded onto local authorities.