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Italy centre-left leader calls for scrapping of "Google Tax"

Tuesday, 17 Dec 2013 | 2:12 PM ET

ROME, Dec 17 (Reuters) - The leader of Italy's Democratic Party (PD), the biggest in the ruling coalition, called on Tuesday for the government to scrap a measure that would raise revenue by making it more expensive for online companies such as Google to do business.

The government of Prime Minister Enrico Letta, who is a member of the PD, has proposed that online advertising be allowed only through companies that can be taxed in Italy.

The so-called "Web tax" or "Google Tax" would become law with the approval of the 2014 budget unless it is withdrawn before completion of the budget's parliamentary passage, which is due by the end of the year.

"We ask the Letta government and the prime minister to eliminate all references to the Web tax and to address the matter after a systematic reflection" with the European Union, Matteo Renzi, the Florence mayor elected leader of the PD in a primary vote earlier this month, said on Twitter.

Renzi has pledged to work with Letta, but the brash 38-year-old mayor has also vocally criticised the prime minister for acting too timidly to pass reforms, and it is still not clear whether Renzi will attempt to guide policy or distance himself from the broad coalition government's actions.

The web tax would not tax the multinationals directly, but force them to use Italian companies to place their advertisements rather than doing so through third parties based in low-tax countries such as Luxembourg, Ireland or outside the EU.

Proponents of the measure have said it will raise at least 1 billion euros per year for a country that is struggling to lower its debt, the second highest in the EU after Greece.

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