Servizio Studi Camera dei Deputati e Senato della Repubblica – Taxation in Italy: an overview
The purpose of this work is to provide a brief overview of Italian taxation and, in particular, of those taxes under attention of legislators in recent years, both because of their political and economic importance (for example, the debate on taxation of labour and productive activities), and their effects on public finances (e.g. measures on tax compliance).
This dossier collects short summaries on legislation of single taxes or tax measures; the latest legislative interventions, for each of them; significant matters and proposals coming from parliamentary work, public and private institutions.
In the current emergency context, and considering the resources available through the European Recovery Fund, tax reform is one of the components of the National Recovery and Resilience Plan (January 2021). As announced in the guidelines (September 2020), the Government intends to review taxation, in particular personal income tax, to reduce tax wedge on labour and to shift the tax burden to other items and, in general, “from people to things”, also in response to numerous recommendations from the European institutions.
The involvement of Parliament in the implementation of the tax reform – which is going to take place as an enabling law (delegation law) – is ensured through the definition of guiding principles and delegation criteria and, subsequently, by delivering parliamentary advice on implementing decrees.
It should also be reminded that the Chamber’s VI Standing Committee on Finance and the Senate’s 6th Committee on Finance and Treasury have started, on November 11th 2020, a comprehensive fact-finding survey on tax reform, in
order to gather views coming from different stakeholders, and to explore the main outstanding issues.
Budget Law for 2021 (Law No 178 of 2020, par. 2 to 7) established a fund with a budget of EUR 8,000 million for 2022 and EUR 7,000 million from 2023 onwards, to finance the reform of the tax system, to be implemented by means of appropriate legislative measures. Resources resulting from the improvement of voluntary tax compliance are allocated to the fund. A share of the fund of not less than EUR 5,000 million and not more than EUR 6,000 million as of 2022 shall be allocated to the so-called universal allowance and to interventions for households and families.
It should be noted that a recent reform action was carried out at the beginning of the legislature, with the 2019 Budget Law, by extending the flat-rate scheme for professionals and self-employed workers, based on a single substitute tax at
15% rate (as introduced by the 2015 Stability Law), to taxpayers with revenues up to EUR 65,000.