Raised Tax Could Ease Italy’s Budget Woes

August 12, 2011 Taxation in Italy

Italy to See Raised Capital gains taxItaly could soon raise the rate of the national capital gains tax in an effort to take reign of the country’s escalating debt problem.

In a concentrated effort to quash criticisms of the government’s handling of the country’s overwhelming debt levels, the Finance Minister of Italy Giulio Tremonti outlined the government’s plans for changes to the national tax system. The new policy was revealed in an address to the joint session of the Budget and Constitutional Affairs committees of Italy’s Chamber of Deputies and the Senate on August 11th.

In his speech the Minister said that Italy must overcome its “rigid, centralized system”, in order to deal with its debt levels, which have now reached 120 percent of the national GDP. To achieve this goal the government is now investigating several tax system changes which could be carried out soon. He revealed that an increase to the national capital gains tax is the most likely measure to be implemented first, with the rate rising to 20 percent from the current rate of 12.5 percent. The Minister is expected to discuss the tax increase with the Italian President Giorgio Napolitano within a few days, and the Cabinet will vote on the proposal as early as the end of this week.

In order to ease the government’s restricted cash flows, Italy could also instate a once-off solidarity contribution. The Finance Minister opted not to reveal the details yet, but was quick to point out that it was not a wealth tax, as has been repeatedly called for in recent months.

The new tax measures are intended as a beneficial accompaniment to the government’s planned EUR 20 billion of austerity measures, which are expected to be voted on by the Cabinet on August 18th.

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