Toward a Comprehensive Tax Reform for Italy
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Summary:
This paper evaluates elements of a comprehensive reform of the Italian tax system. Reform options are guided by the principles of reducing complexity, broadening the tax base, and lowering marginal tax rates, especially the tax burden on labor income. The revenue and distributional implications of personal income and property tax reforms are assessed with EUROMOD, while a microsimulation model is developed to evaluate VAT reform options. Simulations suggest that a substantial reduction in the tax burden on labor income can be obtained with a revenue-neutral base-broadening reform that streamlines tax expenditures and updates the property valuation system. In addition, a comprehensive reform would benefit low- and middle-income households the most, by lowering significantly their overall current tax liability, which results in increased progressivity of the tax system.
Series:
Working Paper No. 2020/037
Subject:
Disposable income National accounts Personal income Personal income tax Property tax Taxes Value-added tax
English
Publication Date:
February 21, 2020
ISBN/ISSN:
9781513529226/1018-5941
Stock No:
WPIEA2020037
Pages:
38
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