Monday, April 03, 2006

italian elections and taxes--round two

The second round of debates between Prime Minister Berlusconi and his left-leaning challenger, Romano Prodi, took place tonight in Rome. When not insulting each other--Prodi said at one point that Berlusconi "cites figures like a drunk person" while Berlusconi called his challenger a "useful idiot of the left"--the two gave taxation and fiscal policy an even higher profile than in their previous meeting. Prodi in particular defended his proposals for a new successions (estate andgift) tax, saying it would apply only to multi-millionaires (sound familiar?) while Berlusconi retorted that the left wanted to set the middle and working classes against each other. The two also traded quips regarding the ever-huge problem of Italian tax evasion, Berlusconi saying that the problem "could not be resolved with the clinking of handcuffs" and Prodi suggesting that even a third of the alleged 200 billion Euro tax gap would serve to balance the Italian budget. Both candidates agreed that the murder of a small boy near Parma, which has riveted Italian TV viewers for the past weeks, was generally speaking a bad idea. Prodi has also defended his proposals for a streamlined tax on financial income (blogged here a few weeks ago) against charges that they would unfairly punish the holders of BOTs (a form of treasury bills) and other small savers.

In his closing statement, Berlusconi dropped a potential bombshell in proposing the abolition of the ICI, a local real estate tax, on first-time homebuyers, although he did not say where the revenue from the tax--a major financing source of local governments--would be made up.

The elections are scheduled for April 9.


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