MNI INTERVIEW: Forza Italia Brunetta: Flat Tax Key To Vote Win

By Silvia Marchetti

     ROME (MNI) - A flat tax rate of 23% to boost growth and consumption rates

will be a main plank of Forza Italia's election manifesto, a leading party

official told MNI in an exclusive interview.

     Renato Brunetta, Forza Italia Lower House president, said he is confident

the measure will help push the centre right to election victory, and would help

reset Italy by tackling tax avoidance through an overhaul of the fiscal system.

     "We aim to introduce an easy and efficient taxation scheme, easy for people

to grasp how it works, not invasive and which pushes them to work more because

they will know that their income will not be swallowed up by an aggressive

taxman," said Brunetta.

     "A flat tax at 23% is simple and allows everyone to know exactly how much

they will pay in taxes, which is a sacrosanct right in a democracy. It will

boost taxpayers confidence and ensure that everyone pays by making everyone pay

less," said Brunetta, an economist and innovation minister in an earlier Silvio

Berlusconi government.

     Led by Berlusconi, liberal and pro-market Forza Italia has always exploited

tax cuts to lure voters and now a flat tax is the cornerstone of the

centre-right's manifesto if it win the March 4 vote. Chances of victory are

high, as Berlusconi's coalition is ahead in the polls, with almost 38% support

levels.

     The new fiscal measures envisage a 'no-tax bracket' up to E12,000 per annum

to shield low earners, with additional tax breaks for families -- yearly

deductions of E2,000 for each child up to 3 years of age and of E1,000 below 3

years. Tax bonuses to help boost birth rates would  also be offered.

     Brunetta assured that nobody earning below E12,000 annually would pay any

kind of income tax. He also argued the measures would generate some E40 billion

in extra revenues over the next four years due to a pick in the tax take and

fewer costly tax disputes, all contributing to fund the measure.

     --NO SGP BREACH

     There would be no breach of European fiscal rules, as the 3% deficit-to-GDP

would remain "untouchable", assured Brunetta.

     "Having one single income level tax, instead of 5 like today, eliminates

all excuses to not work, because if a worker earns more he will not be penalised

with higher taxes. This virtuous behaviour will benefit the public coffers at

the end of the day", he added.

     Italy's taxation levels are amongst the highest in Europe, almost 50% for

high income earners, pushing many workers towards the black market of off-book

employment and avoided taxes.

     Brunetta argued that the flat tax is a matter of "fiscal justice and

equity" and would make Italians less inclined to dodge the taxman and more

willing to pay 23% on their income. The fiscal simplification would also ensure

a one-page, easier tax declaration form that would save both money and time for

citizens and public bodies, he noted.

     Forza Italia's coalition ally, the Lega party of Matteo Salvini, had

initially battled for a 15% flat tax, but accepted the higher level.

     Democrat party leader Matteo Renzi has attacked the flat tax as a

"topsy-turvy Robin Hood measures that will end up only favouring the rich over

the poor".

--PENSIONS SUPPORT

     Support to pensioners and small firms that are penalised in accessing bank

credit are other top priorities.

     "The minimum pension will be raised to E1,000 per month (currently E500) so

as to protect the weakest parts of society," said Brunetta.

     Business investments and profits will be boosted by speeding up public

bodies' payments to firms, currently among the slowest in Europe, and abolishing

VAT split payments introduced by the current Democrat-led government.

     "It is crucial that we adopt pro-growth, market-friendly measures to

support credit access by small and medium enterprises through mini bonds

issuance and crowd-funding platforms," said Brunetta.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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