Rome

Saccomanni hints VAT rise unavoidable

Country must concentrate on investments, says minister

Saccomanni hints VAT rise unavoidable

Rome, May 28 - Economy Minister Fabrizio Saccomanni said on Tuesday following meetings in Brussels with the European Commission that resources freed up by the end to the excessive-deficit procedure against Italy need to be funnelled into investments. When asked if a proposed 1% increase in the country's value added tax (VAT) would be avoided by elimination of the excessive-deficit procedure, Saccomanni said that the country "needs to concentrate on investments". Some eight billion euros of public money is expected to be freed up in Italy with the elimination of the procedure - funds which would otherwise have been applied to reducing the debt as a percentage of GDP. Premier Enrico Letta has said his left-right government will try to avert the rise, which was announced as part of efforts to restore health to Italy's public finances by his predecessor Mario Monti. But Letta may have decided that the rise in the top band of VAT from 21% to 22% cannot be avoided, according to media reports last week.

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