Toward a Comprehensive Tax Reform for Italy

February 21, 2020

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Format: Chicago

Emile Cammeraat, and Ernesto Crivelli. Toward a Comprehensive Tax Reform for Italy, (USA: International Monetary Fund, 2020) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Disposable income, National accounts, Personal income, Personal income tax, Property tax, Taxes, Value-added tax

Keywords: Base-broadening revenue-neutral VAT reform, Compliance gap, Disposable income, EUROMOD, Italy, Market value, Microsimulations, Personal income, Personal income tax, Property tax, Property tax reform, Reform option, Revenue loss, Revenue neutral, Tax expenditure, Tax liability, Taxable income, Value-added tax, VAT, VAT compliance gap, VAT liability, VAT rate, VAT reform, VAT simulation, VAT system, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/037
Stock No:

WPIEA2020037
ISBN:

9781513529226
ISSN:

1018-5941

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