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Tax to be at forefront as Mario Monti takes Italy’s top job

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Mario Monti, Italy’s new Prime Minister, is likely to place taxation high on his government’s agenda and will put his experience as former European Commissioner for tax to good use.

From his background at the Commission, and his comments to International Tax Review last year, tax reform is set be a defining element of his premiership.

Monti delivered an influential report last year on how to complete the EU single market including a number of proposals for taxation reforms such as further work on the elimination of tax barriers, the reform of VAT rules in a single market-friendly way, the development of environmental taxation, the establishment of a tax policy group chaired by the commissioner for taxation, and a common definition of the corporate tax base.

Since the report was published, the Commission has established a tax policy group, come forward with proposals for environmental tax reform and for a common consolidated corporate tax base (CCCTB). Its proposals on the future of VAT are expected next month.

When International Tax Review spoke to Monti after he published his report, he was enthusiastic about progress on the CCCTB and his appointment as the new Italian Prime Minister could give a much needed boost to the politically fraught proposal.

“There are difficulties, but the Commission in its previous term - probably also because of the Irish referendum - has probably not pushed very far the exploration with member states,” Monti said. “In my consultations to prepare the report, I have found considerable appetite for CCCTB in the business community and support by several member states. I believe that, if this topic is framed into a broader tax policy discussion and the Commission shows full commitment, it should be possible to make progress.”

Monti said that he was keen for the Commission to “keep a unitary, holistic approach, linking the measures to relaunch the single market”.

Monti’s own approach to the Italian premiership will become clearer as he begins to work with his new cabinet formed today, but it is unlikely the task of rescuing the country’s ailing economy can be achieved without tax reform and in him, Italy has found a much safer pair of hands than Berlusconi.

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