Tax reform in Italy: hopes and misgivings

Abstract

The problem of the reorganisation of the Italian fiscal system was first taken up by a Tax Reform Commission in 1962, and again by a Study Group in 1964. The Study Committee submitted a preliminary draft of practical solutions in 1966 and later the draft Bill in 1967. The present article reviews the main issues related to the reform of Italy’s fiscal system and the proposals set forth. The author argues that although the latest version of the tax reform project contains several features that are a step backwards from the original draft, the project is still a worthy effort towards modernising the fiscal system. Nevertheless, due to the weakness of the central organs of the State and the administrative machinery, the author concludes that neither of the plans are viable. Instead, a less ambitious plan is proposed centred on consolidating all income tax additional into one single rate, gradually lowering secular tax rates, lowering tax rates and reducing exemptions on the transfers of wealth.

JEL: E62, H21