Italy cuts taxes to aid economy after pandemic

ITALY will slash taxes to boost its economy, in the hope of turbo-charging its post-pandemic recovery.

While the UK looks to raise taxes to pay for the pandemic, Italy’s government, led by a centre-left party, is looking to relieve the burden on tax-payers.

The government was also reported to be looking at cutting tax rates for middle-income earners, which currently vary between 38 and 41 per cent.

Elsewhere in the budget, another €2 billion annually is allocated for healthcare until 2024, tax breaks for home renovations expand and more money will be spent for research.

The eurozone’s third-largest economy is forecast to grow by a betterthan-expected six per cent this year after a deep recession sparked by the pandemic.

Italy is the biggest beneficiary of the EU’S virus recovery fund, standing to receive some €191.5 billion in loans and grants over the 2021-2026 period.

The cabinet approved yesterday the outlines of a €23 billion budget for 2022 which includes €8 billion for tax reductions, as well as an extra €2 billion for the national health service and €3.5 billion for furlough and unemployment benefit schemes.

Mario Draghi, Italy’s prime minister, said: “The government has no intention of increasing taxes. This is a time when money needs to be given, not taken.”

OECD figures for 2019 show that Italian government tax revenue stood at more than 42 per cent of GDP in 2019, against 33 percent in the UK.

Italy has traditionally been a high-tax nation, albeit with high instances of tax evasion.