mercoledì 18 giugno 2014

Govt outlines plans to boost investment, cut bills

Tax credits for companies that invest in machinery, says Padoan

(ANSA) - Rome, June 18 - Tax credits, a break on energy costs, and easier credit access for business are among measures included in a government plan to stimulate sluggish growth, Economy Minister Pier Carlo Padoan said Wednesday. "(These will) help enterprises to make investments (in order to) put the recovery on a solid and sustainable path", Padoan said at a news conference.

Companies that invest more than 10,000 euros in machinery and capital goods will in 2016 receive a 15% tax credit on the value of the investment under the plan. A break on electricity levies will save an estimated 1.5 billion euros for small- and medium-sized business (SMEs), including 800 million euros this year, the economy ministry estimated. As well, a new rule allowing insurers to lend is also aimed at helping improve access to credit for Italian businesses and Padoan said incentives would be provided to encourage more companies to raise money by listing on financial markets. Industry Minister Federica Guidi said that Italy needed to give businesses a "positive shock" to jump-start investment and expansion.

The government of Premier Matteo Renzi has been trying to encourage economic growth in Italy as it struggles to emerge from its worst recession since the Second World War. Many had hoped that Italy was beginning to find its economic footing earlier this year, after the economy had posted positive growth for the first time in over two years at the end of 2013 - albeit growth of just 0.1% in the final three months of last year. However, those hopes were hit hard by reports last month that gross domestic product actually dropped 0.1% in the first quarter of this year compared with the final three months of 2013. At the same time, unemployment in Italy reached 13.6% in the first quarter of 2014, the national statistics agency Istat said earlier this month, adding that youth joblessness has hit 46%. Both national unemployment and youth unemployment reached record highs not seen since quarterly records were first tabulated in 1977, Istat said.

To try to fight against the economic headwinds, Renzi is also pushing for institutional reforms, including changes to the structure of the labour market. Meanwhile, his plan for personal and regional business tax cuts were approved in a decree Wednesday that includes an 80-euro monthly bonus for people earning up to 24,000 euros per annum and those on unemployment benefits. The effect of the tax bonus, which should cost around 10 billion euros per year, will decrease above 24,000 euros annual income and won't be given to people with incomes of over 26,000 euros per year.

The decree also features a 10% cut in the IRAP regional business tax and makes it possible for public bodies to cancel expensive rental contracts, following high-profile cases of properties rented by the Italian parliament for office space. The decree also includes a controversial 150-million-euro cut to public broadcaster RAI and cuts to the budgets of agencies such as ENAV and Poste Italiane which are being partially privatized. The decree raises fees for passports, and announces reforms to the foreign ministry, including new money for developing international commercial contacts and promotions. Padoan's business measures come two weeks after the European Central Bank announced its own package of steps to boost growth in the eurozone and fight the threat of deflation, including two interest-rate cuts and as much as 400 billion euros in new loans.

ECB President Mario Draghi said the ECB had also decided it must "intensify preparatory work related to outright purchases" of asset-backed securities, a limited form of the type of quantitative easing that had been practiced by the United States Federal Reserve. The Financial Times reported Wednesday that the International Monetary Fund was preparing to ask the ECB on Thursday to move ahead on implementing quantitative easing to fight the risk of deflation.

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