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BRUSSELS, May 22 (Reuters) - The European Commission rejected a request by Italy to authorise a value-added tax (VAT) measure for large retailers that was expected to have raised 700 million euros ($800 million) and reduced tax evasion.

Under the proposed "reverse tax" measure, responsibility for paying VAT would have shifted to retailers from wholesalers but the Commission said there was not "sufficient evidence that the requested measure would contribute to combating fraud".

The Commission is still studying a separate measure, worth 900 million euros to Italy - just emerging from three years of recession - that foresees the public sector paying VAT directly to the state instead of to suppliers of goods and services.

If the government fails to plug the gap in the budget that these measures were meant to fill, excise tax on fuels would automatically increase according to a clause in the budget.

Economy Minister Pier Carlo Padoan has said the government would try to head off automatic tax rises that are supposed to kick in if the revenue measures are rejected by the commission.

After the Commission's announcement, a government source repeated that "the government remains committed" to stopping the fuel tax increase.

Italy has promised the EU it will lower its budget deficit to 2.6 percent of GDP this year from last year's 3.0 percent, the European Union's ceiling.

(Reporting by Francesco Guarascio; Additional reporting by Roberto Landucci in Rome; Writing by Isla Binnie and Steve Scherer; Editing by Louise Ireland)