ROME: The OECD 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.
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 activity.”