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    Italy Needs Fiscal Shock to Get Out of Debt Crisis, Tax Cuts Can Help – Senator

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    GENOA (Sputnik) - Italy needs a fiscal shock in order to get out of the current public debt crisis, and such measures as tax cuts have the full potential to prove efficient in the long run, Simone Bossi, the vice-president of the commission of the Italian Senate on the EU policies, told Sputnik.

    "Italy as repeatedly pointed out by [Deputy Prime Minister] Matteo Salvini, is in an extreme need of a real fiscal shock. This must be the primary objective that the government must achieve, already during the next budget. A clear cut in taxes represents an increase in competitiveness on the international market for our companies and for the entire country system; it represents the creation of jobs, and a real opportunity of growth for Italy," Bossi said.

    Last week, the European Commission concluded that Italy had breached the EU fiscal rules because of its growing public debt, justifying the launch of a disciplinary procedure, which may result in penalties.

    Italy's draft budget, which stirred controversy in Brussels, suggested a universal basic income and a flat-rate tax of 15 per cent for freelancers with turnover below 65,000 euros ($73,500) per year but froze an automatic increase in Value Added Tax.

    "We have already had an experiment with a fixed rate of 15 per cent for individuals (freelance workers) who earn less than 65,000 euros per year, which we included in the current budget law. The fact that the solution to lower taxation is right and efficient is evident: since December, we have seen more than 200,000 new VAT numbers opening in Italy, which is proving that in the country there are people who want to invest and to be involved in its affairs," Bossi said.

    The senator stressed that "a clear cut in taxes" was likely to help boost revenues and help "the fight against the notorious tax evasion."

    READ MORE: Italy-EU Debt Row Is a 'Theatre': Political Commentator Suggests a Reason Behind Economic Spat

    If the EU finance ministers back the European Commission’s assessment at a meeting in July, the Commission will need to propose financial sanctions until the end of the month. If the violation is confirmed as a serious breach of the EU rules, Rome might be required to pay a fine of some 3.5 billion euros (0.2 per cent of the country's GDP).

    According to the EU fiscal rules, member states must reduce their public debt every year keeping it below the ceiling of 60 per cent of the GDP. Italian public debt is the second-largest in Europe after Greece. It rose in 2018, now exceeding 132 per cent.

     

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