Italy should press ahead with a clampdown on tax evasion which has already helped to bring in 20 billion euros of extra revenue, Deputy Economy Minister Vincenzo Visco told La Repubblica newspaper.
Critics among the government coalition partners "do not understand that instead of stopping, we must go ahead, because these good results do not only help the budget but also strengthen the government's policy stance," he said in an interview published on Saturday.
"If you tot up the extra revenues collected last year, add those from this year and the resources obtained through the budget, you get to the princely sum of 20 billion euros," Visco added. He said tax evasion was "a real epidemic ... the situation in Italy is disastrous".
The government said on Friday that returns from voluntary tax declarations had jumped 21 percent in the first eight months of this year, equating to a 7.8 billion euro increase. The government of Prime Minister Romano Prodi, a coalition of left-leaning parties, has set great store in its attack on tax evasion to bring in extra income. Now, it faces calls from allies for extra spending but Visco upheld the government's cautious line.
"I'm fed up with bringing in money ... and it being spent badly," Visco said. "The fight against tax evasion only makes sense if you use it to balance out taxation," he said, adding that he would be discussing this with Prodi.
OECD Deputy Secretary-General Pier Carlo Padoan told Il Messaggero newspaper that Italy could cut taxes only if the extra revenues reflected structural change. "If you are talking about a structural rise it would be a good opportunity to cut taxes," Padoan said, adding "in any case it would be a mistake ... to increase spending."
First in line for tax cuts should be industry, Visco said, adding that the government was looking at the areas of small business, self-employed workers and corporate taxes. Visco said the next budget would have only "fine tuning" on taxation but would "really look at spending cuts".
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