In Italy the association representing small and medium-sized enterprises, has suggested that the government’s plan to reduce the regional tax on production activities (IRAP) by 10 percent will only bring a very small measure of assistance to small and medium enterprises. The association suggests that the reduction in the basic rate of IRAP to 3.5 percent would only decrease the total tax rate on small businesses from 63.8 percent to 63.2 percent. Taking into account the probability that there would not be any reduction in the additional IRAP rates set by the regions, the total IRAP reduction would be small. As there will be no decrease in the additional IRAP rates set by individual regions, the effective overall IRAP cut is calculated to be only about 9 percent.
