Milan (AFP)

The Italian government led by Mario Draghi on Tuesday adopted in the Council of Ministers a vast reform intended in particular to lighten the tax burden on labor income and strengthen the fight against tax evasion.

This reform has been demanded for a long time by the European Commission, which has repeatedly denounced the high tax burden in force in Italy, a brake according to it to employment and investment.

It comes in addition to the reform of the Italian justice system, one of the least effective in Europe, which was adopted at the end of September by the Parliament and aims to speed up interminable procedures and unclog the courts.

"Containing tax evasion is a necessary condition to reduce tax rates and spread the tax burden in a way more favorable to economic growth," Italian Minister of Economy Daniele Franco told reporters.

The government intends to strengthen the fight against tax evasion, which costs Italy around 100 billion euros per year, according to the latest estimates cited by Mr. Franco.

As for tax cuts, it plans to devote two billion euros to it from 2022 and one billion euros per year from 2023. The government has given itself a total of eighteen months to prepare the decrees specifying the reform. .

The League (far-right), one of the parties belonging to the ruling coalition, boycotted the Council of Ministers, thus showing its disagreement with the announced revision of the real estate and land cadastre, fearing a rise in taxation.

- Ghost houses -

Adopted without the votes of the League, this reform aims to regularize properties never declared in the land register, known as "ghost houses".

This "transparency operation" also aims to review the cadastral values, largely outdated, to adapt them to current market conditions.

But this reform will not see the light of day before 2026 and will not change the taxation of real estate: "nobody will pay more, nobody will pay less," Mario Draghi assured the press.

"We have no intention of increasing taxes. Right now, the money is being distributed, it is not being taken," he had promised at the end of September to Confindustria, the country's main employers' organization.

Matteo Salvini, the boss of the League, refused to give "a blank check" to the government: "I trust Draghi, but in a year, there will be no more Draghi as Prime Minister", and he will be able to to be "someone who will also tax the air we breathe".

The government also intends to simplify the VAT system which includes a general rate (22%), but also a series of reduced rates, as for food products (4%), maritime transport services (5%) or even sale of medicines (10%).

Mr. Franco estimated at "more than 30 billion euros per year" tax evasion related to VAT.

The regional tax on production activities (Irap), to which companies are subject, will be "gradually eliminated", the minister also announced.

Among the avenues under study is a merger of this tax with the corporation tax (Ires).

© 2021 AFP