Italy Should Pursue Anti-Tax Evasion Measures: OECD
Friday, February 17, 2017
The OECD has said Italy should limit its fiscal plans to those measures that would not inhibit improved economic growth.
In its 2017 Economic Survey for the country, the OECD said that Italy should look to measures to enhance tax compliance and introduce real estate taxes.
The OECD noted that the Government "is committed to fiscal sustainability
and continues to reduce the [fiscal] deficit gradually," but that its "mildly
expansionary fiscal policy" remains appropriate as economic growth still
needs to be supported.
The OECD recommended that Italian tax revenues could
be best increased by enhancing tax compliance. It pointed out that, although
the Government has had some success in gleaning additional tax receipts from
its actions against tax evasion, Italian tax administration "has ample
scope to improve human resources management and use more extensively information
and technology (IT) tools. IT is crucial to extend the use of e-invoicing and
improve value-added tax compliance."
"Moreover, in Italy non-cash means of payments are used little compared
to other OECD countries, facilitating tax evasion," it added. "Lowering
the threshold on cash payments from EUR3,000 (USD3,200) back to EUR1,000 (the
same level as in France) would help lowering tax evasion." The maximum
limit for cash payments was increased to EUR3,000 only last year.
The OECD proposed that enhancing tax compliance could "generate large
additional revenues to allow for a permanent reduction in social security contributions
in a revenue-neutral way. … Permanently lowering social security contributions
would raise growth and employment [and future taxes] over the medium and long
term, thus accelerating the reduction in the debt ratio."
In that respect, it also pointed out that "recurrent taxes on residential
property are another growth-friendly tax. … Such taxes are underused in
Italy and in this regard, the recent abolition of the property tax on first
residences was a step backward."
It recommended that "the Government should update the taxable
value of properties on a regular basis, to ensure that relative property price
changes do not induce inequities. The property tax on primary residences should
be re-introduced so as to generate the fiscal space to reduce taxes on productive