Europe Economy

Italy’s Record Tax Haul Helps Cut Deficit

Rome, Italy
Magdalena Jankowska | E+ | Getty Images

Italy's fiscal deficit narrowed in the final quarter of 2012 to 1.4 percent of gross domestic product, compared with 2.6 percent in the same period of 2011, official statistics agency ISTAT said on Friday.

The smaller deficit at the end of last year was due to a surge in revenues from tax hikes imposed by Mario Monti's outgoing technocrat government, and in particular from an unpopular housing tax.

This pushed up the so-called "fiscal pressure" (revenues from taxes and welfare contributions as a proportion of GDP) to a record 52 percent in the fourth quarter.

Last month ISTAT issued full year public finance data showing the 2012 deficit amounted to 3.0 percent of GDP.

The data on Friday, calculated according to slightly different criteria which are not used for the purposes of comparative European Union data, gave a 2012 deficit of 2.9 percent.

This data, unlike the figures considered valid by Eurostat, does not include the effect of debt swap operations conducted by the Treasury and local governments. These operations pushed up the 2012 deficit by some 2 billion euros, or 0.1 percent of GDP.

This year the deficit based on the EU-harmonized rules is targeted to fall marginally to 2.9 percent.

The public finance data was scheduled to be issued at 08:00 a.m. London time but was delayed due to a protest by ISTAT staff.

ISTAT gave the following quarterly public finance data.

All data are expressed as a percent of gross domestic product.