Rome

Saccomanni says tax-cutting is long haul operation

Economy minister says spending cuts needed

Saccomanni says tax-cutting is long haul operation

(By Emily Backus) Rome, July 25 - Italy's battle to lower taxes will be a long one and spending cuts will be needed to win it and deliver quality public services more efficiently, Italian Economy Minister Fabrizio Saccomanni said Thursday. Saccomanni told the Senate finance commission that there was ''ample room'' to slash waste and still provide Italian citizens ''high quality'' public services. At the same time, the minister urged tax-cutting - for workers, businesses, and as a whole - as an enduring priority, sayinf it must be supported by the fight on tax-evasion. Italy has raised taxes in recent years as various administrations have grappled with an outsized public debt, a tax-base weakened by years of recession and crisis brought on by spiralling interest rates in 2011 and 2012. ''To support economic recovery and a prospect of sustainability for the country, as well as restructuring the tax burden, we must flank (these initiatives) with spending rationalization,'' Saccomanni said on Thursday. The minister added that spending cuts were a ''necessary condition for a permanent and meaningful reduction of the tax burden''. Saccomanni explained that progress made with previous spending cuts must be combined with new rationalization of public expenditures to carry out ''a significant rethinking of the public machine,'' which he maintained still had ''ample room'' for ''savings'' and streamlining ''without renouncing the delivery of high quality services''. Saccomanni also vowed to work ''with tenacity'' to lower the tax burden, which reached 44% of the gross domestic product in 2012, and declared that tax-cutting must remain a policy objective ''for years, not months''. The minister described tackling tax evasion as a necessity to help lower tax rates, and also as a tool for achieving growth and a fair society, in addition to stabilizing budget resources. ''Because the maintenance of budget stability goes hand in hand with growth and (social) equity, the fight against tax evasion absolutely can not be slackened,'' Saccomanni said. Retailers association Confcommercio said honest Italian households and businesses face a real tax burden of 54% in a report on Thursday, adding that this was the highest rate among the world's advanced economies. The figure comes after the underground economy was excluded from the calculations. It forecast the 'apparent' tax burden this year, using the official method that features the black market in its calculations, will be 44.6%. The report estimated that Italy's underground economy was worth the equivalent of 17.4% of gross domestic product, or 272 billion euros in taxes dodged every year.

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