Italy's Monti Announces Tax on Fininacial Assets, Says It Should Widen To All Europe

Snip ~ He also promised "significant measures" against tax evasion and said the new approach would be more "incisive" than past efforts. That new approach will involve requiring households to make transparent declarations of wealth, with many forms of financial assets subject to a new tax, Monti said.

December 4, 2011

Italy's Monti Announces Tax on Fininacial Assets, Says It Should Widen To All Europe

Italian Prime Minister Mario Monti told his compatriots late Sunday that his government has been created with a "short mandate, but a severe task," which he described as "saving" Italy from being blamed for a blowup of Europe's single currency as well as boosting growth in the euro-zone's third-largest economy.

Monti said the government will tax financial assets held by households, a measure he said should be applied across Europe. He also said Italy now backs a Europe-wide financial transactions tax.

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Monti spoke to reporters shortly after his technocrat cabinet approved a budgetary law aimed at making sure Italy eliminates its budget deficit by 2013, even as its own economy and those of its trading partners slow.

The measures will impose around EUR24 billion in tax cuts and spending cuts, according to government sources.

Monti blamed Italy's problems--primarily its EUR1.9 trillion in public debt--on decades of short-termism in politics that came before Italy adopted the euro as its currency.

He said his cabinet's goal was to "distribute sacrifices" in a fair manner.

Monti, a former European commissioner, said he would forgo any salary for his work as prime minister, as well as his position as interim economy minister.

He also promised "significant measures" against tax evasion and said the new approach would be more "incisive" than past efforts.

That new approach will involve requiring households to make transparent declarations of wealth, with many forms of financial assets subject to a new tax, Monti said.

He also announced an additional 1.5% tax levy on all capital that Italians held offshore but legalized due to a 2010 amnesty law. That amnesty brought back almost EUR100 billion of undeclared wealth, whose owners were required to pay 5% tax.

The extra tax amounts to a form of "justice," Monti said, adding the proceeds will allow more pensions to be indexed to inflation in the next two years. Such indexation will be suspended for higher levels of benefits.

Alongside the capital tax hikes, there are also measures that will support companies, thereby boosting employment prospects, Monti said, without providing details.

Monti signaled an effort to reduce the cost of Italy's sprawling political apparatus. He said that provincial governments would be slimmed down and their elected assemblies suppressed.

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