What's Come to Perfection Perishes: Adjusting Capital Gains Taxation in Italy

Posted: 6 Sep 2003

See all articles by Julian Alworth

Julian Alworth

Bocconi University - ECONPUBBLICA

Giampaolo Arachi

Econpubblica - Università Bocconi; Università di Lecce - Dpto. di Scienze Economiche e Matematico-Statistiche

Rony Hamaui

Università Cattolica

Abstract

Italy is the first country to have experimented with both accruals and retrospective capital gains taxation along the lines suggested by Vickrey (1939) and Meade (1978). This paper describes the Italian experience, highlighting its peculiar features and the lessons that can be learned by other countries wishing to pursue these approaches. It illustrates the mechanics of the adjustments to the realization based capital gains tax and how far they diverge from the original proposals. The paper also draws attention to the administrative and political difficulties encountered in implementing the reform. These factors ultimately resulted in a repeal of retrospective taxation, and, in due course, may also entail the abolition of taxation on an accrual basis. The paper highlights the crucial role that financial intermediaries can play in lowering compliance costs under a proportional tax system and the effects on tax revenues.

Suggested Citation

Alworth, Julian and Arachi, Giampaolo and Arachi, Giampaolo and Hamaui, Rony, What's Come to Perfection Perishes: Adjusting Capital Gains Taxation in Italy. Available at SSRN: https://ssrn.com/abstract=426360

Julian Alworth (Contact Author)

Bocconi University - ECONPUBBLICA ( email )

Via Sarfatti 25
20136 Milan, MI 20136
Italy

Giampaolo Arachi

Università di Lecce - Dpto. di Scienze Economiche e Matematico-Statistiche ( email )

Ecotekne, Strada per Monteroni
Lecce 73100
Italy
++390836298775 (Phone)
++0270036419 (Fax)

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Econpubblica - Università Bocconi ( email )

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Rony Hamaui

Università Cattolica ( email )

Via necchi
Milano, 20123
Italy

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