European Commission to Urge Italy to Strengthen Industrial Strategy and Tax Reform

The European Commission will publish country-specific recommendations on 3 June that urge Italy to adopt a stronger industrial strategy, reform its tax system, and expand capital markets, according to a document seen by Euronews. The draft text criticizes the absence of clear policy actions and governance structures for industrial policy.

It notes that a White Book titled "Made in Italy 2030" defined an industrial strategy but lacked implementation details.

The document states that stagnant productivity continues to characterize Italy and reflects wide gaps between northern and southern regions. It identifies excessive fragmentation of incentives, lack of prioritization of strategic sectors, and weak coordination among industrial, infrastructure, and research policies as contributing factors.

Infrastructural deficits are listed among the main factors limiting competitiveness.

The Commission recommends shifting the tax burden from labor to other sources of revenue that are less detrimental to growth. It criticizes the flat-tax regime for the self-employed, saying it makes the tax system highly complex, weakens progressivity, and erodes the tax base.

Additional recommendations include fighting tax evasion and reducing remaining tax expenditures, including those related to value added tax and environmentally harmful subsidies. The document may still be subject to last-minute changes before publication.