Txt rage: SMS levy to fund tax cuts

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The Independent Online

Italy's legions of mobile phone users are furious that they may be taxed for sending text messages under a proposal aimed at funding tax cuts.

The Premier, Silvio Berlusconi, is considering a one euro cent (0.6p) levy on the millions of SMS messages pinging across the networks every day to pay for promised tax cuts to companies and employees over the next two year, according to a report in the daily Corriere della Sera . About 270 billion messages were sent in Italy last year, so the government could hope to raise €270m (£188m).

The proposal comes amid mounting pressure on Mr Berlusconi to make good on his year-old pledge of lower taxes. Italy's chronic financial problems had made that impossible until now.

The Italian premier came under fire yesterday from the International Monetary Fund, which said the country's mounting deficit should take priority over tax breaks. Mr Berlusconi defended the government's plans, which include cutting corporate taxes in 2005 and income tax rates in 2006.

The government believes tax cuts will stimulate the economy but mobile phone owners are being asked to foot part of the bill. Rome has pointed to the success of a similar measure in the Philippines, which generated millions of dollars by taxing text messages.