Italian Economics Minister Explains The Latest Tax Incentives

by Ulrika Lomas, Tax-News.com, Brussels

Wednesday, July 29, 2009

The government’s latest anti-crisis package, announced last week, is part economic stimulus, part cost reductions and part increased collection from the underground economy, so explained Giulio Tremonti, Italy’s Minister of Economics and Finance, during the course of a press conference.

The total cost for the public purse from the financial incentives (particularly, the restriction on bank commissions and the tax credits for industrial investment) is forecast at around EUR1.5bn in the remainder of this year and EUR3.4bn in 2010. He reiterated that the stimulus had to be contained in scope as the government had no intention of increasing the public deficit, that he defined as “absolutely controllable and manageable”.

The effect of the 50% tax reduction for industry re-investing in machinery and machine tools, he said, will already be seen next year, not 2011. As the tax credit runs from now to June 2010, “its benefit will be seen in the first available tax year,” he stated. Its benefit, he continued, will also be experienced by all of industry, not just the largest companies.

The package, he stated, “does not increase the (public sector) deficit but, on the contrary, allows us to maintain the three-year financial plan, with some adjustment.” Tax collection, he said, despite being “under stress” due to the recession, was “in line with our forecasts”. He added that the Italian public sector deficit was “in line with the economic cycle, according to European rules”.

With regard to an expected further tax amnesty, he said that the government was following the international situation with interest. Noting that the USA had been the first to act, and that the UK would follow in September, he reiterated that Italy, for the moment, was simply continuing to put all relevant OECD measures into operation.