Italy will reduce taxes by 35 billion euros in 3 years

Moscow. October 16. The Prime Minister of Italy Matteo Renzi on Thursday presented a proposed budget for 2016, with a substantially reduced taxes and significantly less reduction of Gossart than expected. According to the head of the Italian government, such an approach would spur the economic recovery, writes the Financial Times.

The economic program provides for Renzi’s tax cuts to 35 billion euros over three years. In particular, abolished a tax on first residential property in property taxes with the agricultural and industrial equipment. Will be reduced licence fees for broadcasting. Companies investing in equipment and development, will receive tax relief.

Italian profit tax of companies (IRES) will be reduced from 27.5% to 24% in 2017. If agreement could be reached with the European Commission, the change will be postponed to 2016.

Government spending that were originally planned to cut 14 billion euros in 2016, and then at least 10 billion euros, the final version of the budget reduced by only 5 billion euros.

The program of voluntary disclosure of tax information, adopted in early 2015 to combat tax evaders, will bring to the budget of 1.4 billion euros this year and 2 billion euros next.

For discussion and approval of the draft budget to the Cabinet of Ministers took about 90 minutes, much less than usually.

Now is expected to be followed by sharp criticism from Brussels, with Italy remain difficult. Due to the high debt burden (public debt exceeds 130% of GDP) EU officials are studying the budget documents of Italy with great care.

“Some of us believe that European rules must be observed, and some want to use their fantasy,’ said Renzi. – We make a choice in favor of compliance with European rules, even though we did a lot of work to change them”.

Formally, the budget deficit of Italy is 2.2% of GDP next year will be more than an earlier projection of 1.8% of GDP, although within the requirements of EU legislation – less than 3% of GDP. Besides, it will be lower than expected this year, 2.6 per cent of GDP.

However, the pace of fiscal consolidation, as previously agreed with the European Commission, will slow: Italy plans to raise the structural budget deficit by 0.4 percentage points (0.4 percentage points), but not reduce it by 0.5 percentage points, as provided for by the agreements.

The Outlook on the national debt also increased – from 130,0% up to 131.4% of GDP. However, Renzi stressed that the debt burden, however, will decline for the first time in nine years. In 2015, we expect debt of over 133% of GDP.

In September, Italian authorities have improved the GDP growth forecast to 0.9% in 2015 and 1.6% in 2016.