Governments can not Reform the tax system without taking into due consideration the implications that this behavior to two external consideration to the Implications That this external behavior-ta. ta. This observation is valid especially for Reform This observation is valid Especially for the Reform of the taxation of financial assets or income derived from them. Taxation of financial assets or income Arising therefrom. In an open economy, the greater mobility of production factors, in an open economy, Greater mobility of production factors, the greater the opportunity to evade taxes or to move to Greater opportunities to evade taxes or move factors of production characterized by a less mobility. inputs characterized by a lower mobility. The increased
Increased mobility of capital at international level is demonstrated by the fact that mobility of capital is the fact Internationally That
the mid-nineties the flow of financial investment the mid-nineties the flow of financial
-border investment has increased to reach the 200 per cent cross-border Increased
to reach 200 percent of GDP compared to 10 percent of Gross Domestic Product beginning Compared to 10 percent of the early eighties
. Eighties. Highly integrated world economy - or eco-Highly integrated world economy - or eco-
globalized economy, as is usually defined by the newspapers globalized eco- economy, as is defined by newspapers Usually eco-nomic
- is the result of an intensified account liberalization ness - is the result of Increased
capital account liberalization, combined with financial and technological innovations. capital, coupled with financial and Technological Innovations.
The European Union (and, more generally, the European Economic Area) and The European Union (and, more Generally, the European Economic Area) is
was a harbinger of this trend, especially since heralded this trend, Especially since when
remove all capital controls When to remove all capital controls to
following the adoption of the Single European Market. Following the adoption of the Single European Market.
In this context, the current reform of the taxation of Italian In this context, the current Italian Reform of the taxation of capital gains
has several positive points. income from capital has many positive points. First it First, it
represents a significant step forward in simplicity, transparency Represents a Significant Step Towards simplicity, transparency and neutrality
competition, thereby promoting allocative efficiency and a ence and neutrality, and thereby Promoting allocative efficiency
a more equitable distribution of income. more equitable income distribution. It also recognizes the restric-It Also Recognizes the
restric-tions imposed by globalization by imposing a moderate rate of globalization tions by Imposing a moderate rate
minimum withholding tax of 12.5 percent on interest earnings minimum of 12.5 percent withholding tax on interest earnings, and strengthening the monitoring of
tax obligations. and Strengthening the monitoring of tax compliance. On both on Both
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