Italy Increases Duties To Reduce Fiscal Deficit
It is frequently said that governments give with one hand and take back with the other with tax policy, particularly at budget time. And the greatest trick of the finance minister is to do this without anyone really noticing. They don’t always pull it off though, because some clever so-and-so in the media, or whose job it is to hold governments to account, usually notices such creative budgetary accounting and broadcasts it. But still they try.
Italian taxpayers must be getting used to this game of give and take. There, the Government is desperate to deliver meaningful tax cuts in line with its policy of reducing economy-strangling tax and regulation. But it’s struggling to deliver. Spending must be cut, not only for the health of the Italian economy, but also under EU fiscal rules designed to prevent runaway deficits. But spending cuts are very unwise things to do for governments clinging on to power with their collective finger tips. They therefore turn to those time-honored devices, which collectively can be classified as “stealth taxes,” and which are often used by finance ministers to dig themselves out of fiscal holes. These are things like sin taxes on booze and tobacco, excise taxes on fuel, etc., and various fees and charges for government services and the like. The sort of tax that most people know is there, but that can’t really be seen. Eventually Italy may see meaningful tax cuts. But, all the while the country flirts with fiscal crisis, Italians will probably pay the Government back for its generosity in other ways.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look