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Bankitalia Attacks High Italian Corporate Taxes

16 July 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

A study from eight of the Italian central bank's economists has pointed to the country's high corporate tax burden as one of the major reasons for the loss in production, productivity and competitiveness of Italian industrial companies during the current economic recession.

The fall in Italian industrial production since April 2008 has been much worse than that experienced, for example, by Italy's neighbors France and Germany. There emerges, from the Bankitalia's analysis, a picture of Italian industrial weakness, with every sector showing productive activity that is very much slower than before the latest economic recession, with the exception of food and pharmaceuticals.

However, the economists stress that, to increase competitiveness, the priority should not be a reduction in labor costs, but that action should be taken on the comparatively high tax levels and energy costs in Italy. In fact, the wage cost for an individual unmarried Italian employee was found to be 15 percent less than in Belgium and France and just over 30 percent less than in Germany, in 2011.

They stress that the Italian corporate tax burden is more than 2.5 percent above the Euro area countries' average, and that, if the incidence of the regional corporate tax is also added, that excess is increased to 5 percent. It is also said that the underground economy in Italy contributes to the corporation tax burden on business.

Finally, Bankitalia indicates that Italian companies have also to suffer further expense from the time soaked up by tax administration complexities, and from costs that are less quantifiable and more indirect, such as the uncertainty caused by the constant changes to rules and regulations.



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