Toward a Comprehensive Tax Reform for Italy

39 Pages Posted: 18 Mar 2020

See all articles by Emile Cammeraat

Emile Cammeraat

Organization for Economic Co-Operation and Development (OECD)

Ernesto Crivelli

International Monetary Fund (IMF)

Date Written: February 2020

Abstract

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.

Keywords: Recurrent taxes on immovable property, Tax revenue, Tax reforms, Tax evasion, Tax rates, Italy, personal income tax, VAT, property tax, microsimulations, EUROMOD, WP, tax expenditure, decile, revenue-neutral, reduced rate, revenue loss

JEL Classification: D31, C63, R20, H20, E01, K34, H2, H71, H83

Suggested Citation

Cammeraat, Emile and Crivelli, Ernesto, Toward a Comprehensive Tax Reform for Italy (February 2020). IMF Working Paper No. 20/37, Available at SSRN: https://ssrn.com/abstract=3555907

Emile Cammeraat (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Ernesto Crivelli

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
45
Abstract Views
189
PlumX Metrics