Italy plans cuts to business taxes

Italy's Finance Minister Pier Carlo Padoan has said a reduction in business tax will form part of the government’s overall tax cut pledge over the next few years.

Italy plans cuts to business taxes
Italy's Finance Minister Pier Carlo Padoan said the government would lower business taxes. Photo: Gabriel Buoys/AFP

Speaking at the annual forum of business leaders in the Como town of Cernobbio, Padoan said that the government is ”studying a further reduction of taxation in favour of corporate competitiveness”, Il Messaggero reported on Monday.

Imu, an unpopular tax on primary homes, and Tasi, the municipal service tax, will also be abolished from 2016.

The planned tax cuts, which will be made over the next three years, will coincide with crucial reforms in what premier Matteo Renzi described in July as “a pact with Italians”.

There was an air of cautious optimism among business leaders at the forum, Reuters reported, with Stefano Venturi, the chief executive of the US computer company Hewlett-Packard in Italy, telling the newswire on Sunday that the firm is considering boosting investment in the country and hiring new staff.

Since being appointed prime minister in February 2014, Renzi has tackled reforms to the labour market, public administration and the education and banking sector.

The fruits of those efforts are slowing being seen, with the unemployment rate falling to 12 percent in July, while the economy, which staggered out of recession late last year, grew by 0.3 percent in the second quarter. Economic growth for the year is forecast at 0.7 percent.

During a speech at the forum on Friday, an upbeat Renzi said that Italy is “no longer a problem for Europe, but a solid, stable and strong country”.

But those who attended also told Reuters that much more needed to be done to bring Italy's growth in line with the rest of Europe, such as tackling bureaucracy and corruption as well as speeding up the infamously clogged justice system.

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EU finds Italy’s Alitalia loans ‘illegal’ but airline free to keep money

The EU's antitrust authorities ruled Friday that Italy's 900 million euro loans to long-struggling airline Alitalia were "illegal", but cleared the country's new carrier to get state funding and avoid paying back the money. 


“Following our in-depth investigation, we reached the conclusion that two public loans worth EUR 900 million granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in breach of EU State aid rules,” said EU competition chief Margrethe Vestager said in a statement.

“They must now be recovered by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

But the authorities in Brussels simultaneously said new flag airline ITA – set to start flying next month – was not liable to reimburse the money and that 1.35 billion euros being injected into the firm by Rome did not breach state aid rules.

“Italy has demonstrated that there is a clear break between Alitalia and the new airline ITA, and that its investment in ITA is in line with terms that a private investor would have accepted,” Vestager said.

“Once ITA takes off, it is for Italy and ITA’s management to make use of this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector.”


Loss-making Alitalia was placed under state administration in 2017 but Italy has struggled to find an investor to take it over. The situation was only exacerbated by the coronavirus pandemic that grounded airlines worldwide.

The Italian government gave the company two loans for the amount of EUR 600 million and EUR 300 million in 2017, as Alitalia scrambled for liquidity without access to the debt market.

Earlier this year Italy said it had reached an agreement with the European Union for a bailout that creates a new debt-free company to take over some of Alitalia’s assets – ITA.

The board of directors of ITA last month approved a binding offer for 52 of Alitalia’s aircraft, related airport slots and other assets.

The Italian government has created a 100-million-euro ($117-million) fund to reimburse Alitalia customers.

Italy provided state loans to Alitalia totalling 1.3 billion euros between 2017 and 2019.

In July, it approved another 700 million euros for ITA.

Further sums are expected in 2022 and 2023, bringing the total to 1.35 billion euros.