Italy cannot fund lower taxes by weighing on its budget and must rely on fighting tax evasion, the Economy Minister said on Saturday, resisting growing pressure to ease the tax burden. Plans outlined by Economy Minister Giulio Tremonti on Saturday partly echoed suggestions by a top Bank of Italy official, who warned the country had to spur its growth rate or risk slipping out of the advanced economies league.
Tremonti and the central bank's Director General Fabrizio Saccomanni were speaking separately at a conference organised by Italy's young employers' association Confindustria Giovani. "(The need to pursue) a balanced budget poses limitations. A tax reform cannot have an impact on the deficit," Tremonti said.
"Where to get the money for a tax reform that doesn't wreck public finances? Tax evasion is an enormous stock of resources." Italy raised 25 billion euros ($35.98 billion) from fighting tax evasion in 2010. Employers' association Confindustria estimates Italy's tax evasion totals 120 billion euros.
Since Italy's governing centre-right coalition suffered a blow in the latest local elections, Prime Minister Silvio Berlusconi has stepped up pressure on Tremonti to quickly deliver a tax reform to revive the government's popularity. Tremonti said tapping tax evasion required time and stopped short of indicating clearly which taxes Italy would aim to cut.
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