Tax, the Deputy Minister of Economy Maurizio Leo: wise to bring VAT to zero for primary goods and children

ROME. The «criminal sanction must really apply in serious cases, such as fraud, omitted declaration, invoices for existing operations, where there is callous, underhanded behavior by the taxpayer; but in cases where there is in quotes an evasion of necessity in which the taxpayer has exposed everything, has included all the taxes in the return but has not been able to pay, administrative sanctions will apply but not criminal ones. That’s kind of logical.” This was stated by the Deputy Minister of Economy Maurizio Leo in an interview with Il Sole24Ore on the delegation to the government for the tax reform approved yesterday by the Council of Ministers.

“For products for children, as well as primary goods, thinking of a zero rate seems to me to be a wise intervention to adopt”, he continues on products that could be included in zero VAT as part of the tax reform. As regards the VAT review more generally, Leo said that the rates of 5% and 10% “may be subject to review”: “we have some goods with a 22% rate – he exemplified – I am thinking of a bottle of mineral water, which can obviously be included within the 10% where meat, fish, etc.».

An “intelligent pruning” of deductions, while maintaining those for interest, medical expenses and education. This is the work that the government intends to do on the ‘tax expenditures‘ as part of the tax reform. «On the tax expenditures we need to focus on the direct tax part, where we have deductions, allowances and tax credits,” he explained.

For deductions, in particular, those on interest, medical expenses and education “must remain standing”, but for the rest “we are going to do selective work. Then when we have identified the deductions that still have a reason to exist, with the exception of three that must remain standing and for all income brackets – perhaps to a certain higher bracket if you need to find the resources you can think about it – the others, having done an intelligent pruning, we could calibrate them on the brackets and income brackets, ensuring more for those with lower incomes and less for the higher ones». “The work we have to do is to make a general slimming down of this sector and here we can find the resources to at least contribute to the reduction of tax rates,” said Leo.