Italy to cut income tax for employees, sources say

ROME, October 19 - Reuters: Italy's government plans to set aside at least 8 billion euros $9.33 billion in its budget for 2022 to take out income tax, two sources close to the matter said.

The move is designed to benefit employees by reducing the so-called tax wedge, the difference between the salary an employer pays and what a worker takes home, which is particularly high in Italy.

The Organisation for Economic Cooperation and Development OECD announced earlier this year that the tax wedge in Italy was estimated at 46% in 2020, the fifth highest out of a group of 37 advanced nations.

The fiscal burden on employees is a chronic weakness of the Italian labour market, economists say, penalizing competition and the competitiveness of the country's production system

His government will release his draft budget later on Tuesday, which will outline additional expansion measures worth more than 22 billion euro, including the cut of income taxes.

These measures are aimed at creating growth in Italy next year from 4.7% to 4.2% under unchanged policy scenario, the Treasury said last month.