In their statement at the conclusion of Article IV consultation with Italian officials, IMF staff observe: "Lowering the tax wedge and repairing bank and corporate balance sheets will boost jobs and investment in productive sectors and firms. And the Jobs Act will help workers transition more easily to these new job opportunities. The resulting productivity gains will be amplified by more efficient public sector and more competitive market for products and services. Now is the time to press ahead full force with the reform agenda."

According to OECD, the tax wedge is a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee – which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. Employer social security contributions and – in some countries – payroll taxes are added to gross wage earnings of employees in order to determine a measure of total labour costs.

The tax wedge on labour provides one measure of the extent to which the tax system discourages employment, it says.

Noting that Italy's economy is emerging slowly from a painful recession, IMF statement notes: "Tax simplification and judicial reform efforts will help support economic activity and strengthen competition. Tax simplification and judicial reform efforts will help support economic activity and strengthen competition.

IMF staff has concluded that Italy needs to continue fiscal rebalancing through more efficient spending and lower taxes to support growth.

Decisive implementation of different reform initiatives will help the Government meet the deficit target and make space for further reduction of the tax burden.

As put by the Statement, "In addition, a modest structural surplus over the medium term will reduce debt faster, providing valuable insurance against changes in market sentiment, and helping comply with EU fiscal rules."

Italy's economy is emerging slowly from a painful recession. Buoyed by European Central Bank's ( ECB's) quantitative easing (QE), government bond yields have fallen to pre-crisis lows, despite the recent uptick, and bank and corporate funding costs have declined. Boosted by lower oil prices, a weaker euro, and recent reform efforts, confidence indicators have rebounded. After stabilizing in Q4 2014, real activity expanded in Q1 2015.

The Statement notes supported by stronger exports and higher spending by firms and consumers, growth is projected at 0.7 percent this year and 1.2 percent next year.