ROME: Italy will not raise taxes during the next three years, Italy’s Premier, Matteo Renzi, has said, setting out the Government’s medium-term fiscal and economic plans.
The announcement came alongside the release of the Government’s new Economic and Financial Document (DEF), which builds on the Government’s 2015 Budget (Stability) Law. The Budget (Stability) Law, intended to support the recovery in a revenue-neutral way, contained some EUR18bn (USD19.1bn) in tax cuts for businesses and low-income households.
Discussing the Government’s future plans, Renzi emphasized that “there will be no new taxation; instead the period of increasing taxes has ended. … That is a fundamental tenet of the highest priority for Italy. We have to ensure that future sacrifices are not made by the country’s citizens.”
The DEF forecasts that Italian GDP will recover by 0.7 percent this year, after three consecutive years of recession, and by a further 1.4 percent next year. Renzi said, based on these assumptions, the Government may be able to reduce taxes in 2016.
Economy and Finance Minister Pier Carlo Padoan disclosed that, with no new spending cuts and funds from privatizations providing up to 1.8 percent of GDP during the period, the fiscal deficit-to-GDP ratio would be 2.6 percent this year (as agreed with the European Union) and 1.8 percent in 2016, before reaching a balance in 2018.
Renzi confirmed that the Government has around EUR1.5bn extra to spend in 2015, equal to 0.1 percent of GDP and the difference between the 2.5 percent deficit proposed by the European Commission and the 2.6 percent deficit eventually agreed. Renzi indicated that the Government will decide how to spend the additional funds in the coming weeks.
