The parties that support Italian Prime Minister Mario Monti’s unelected government demanded changes to his budget on Saturday, saying it would hurt households already suffering from austerity measures.
Although proposals announced on Wednesday included a tax cut for low earners, they also included a rise in value added tax and limits on other tax breaks as Monti tries to bring public finances under control to avoid a Greek-style debt crisis.
Whether the measures in the budget for next year to 2015 would mean more belt-tightening overall is unclear. However, with parties gearing up for a parliamentary election in six months, they did not hold back in criticizing the plans.
Photo: Reuters
“There are many things that must be changed,” People of Liberty party secretary Angelino Alfano told a conference in Tuscany. “First and foremost, the value-added tax [VAT] increase must be eliminated. It’s not tolerable that a VAT hike gobbles up the small benefit of the income tax cut.”
The other two main parties supporting Monti also called for changes. There was no sign they would withdraw their support for Monti, but any changes to appease them would make it harder to meet Monti’s target for cutting the deficit.
Democratic Party economic adviser Stefano Fassina said further spending cuts to schools and healthcare are not acceptable and that the budget needs “significant changes.”
The Union of the Center party, led by Pier Ferdinando Casini, criticized the retroactive elimination of income tax breaks.
A draft of the spending bill says the new rules will be applied to this year’s taxes, which are paid next year. The budget still has to be presented to the Italian parliament.
Monti, who took power in November last year with a pledge to avert a catastrophic debt crisis, has not ruled out changes to the spending law in parliament, but has repeatedly said the public account targets are sacrosanct.
The 1 percentage point VAT increase will bring in more than 3 billion euros (US$3.8 billion) next year and more than 6.5 billion euros in 2014, according to a budget draft, which will not be sent in its final form to parliament until later this week.
Meanwhile, the income tax cuts of 1 percentage point for the two lowest tax brackets would cut revenue by 5.5 billion euros, Italian Minister of the Economy Vittorio Grilli said on Friday.
However, opponents of the measures say the impact of the value-added tax increase and limit on tax breaks would be greater than the income tax cut.
“In reality, there is a tax increase even with a 1 point cut to income taxes,” said Susanna Camusso, head of Italy’s largest union, the CGIL, which threatened to call a general strike after the budget was presented on Wednesday.
Austerity measures imposed by Monti to try to bring public finances under control have exacerbated a year-long recession in the eurozone’s third-biggest economy and have been a focus of criticism from all political factions.
Monti, who took over from former Italian prime minister Silvio Berlusconi amid a dire financial crisis, has ruled out running in next year’s election, but has said he would be available to serve again if Italy’s fractious political parties are unable to form a government.
The government forecasts Italy’s economy will contract by 2.4 percent this year and 0.2 percent next year, and the public deficit is expected to hit 2.6 percent of GDP before narrowing to 1.8 percent next year.
A Reuters poll of more than 20 economists this week forecast a contraction of 0.7 percent next year, a deeper recession than the Italian government expects.
‘IN A DIFFERENT PLACE’: The envoy first visited Shanghai, where he attended a Chinese basketball playoff match, and is to meet top officials in Beijing tomorrow US Secretary of State Antony Blinken yesterday arrived in China on his second visit in a year as the US ramps up pressure on its rival over its support for Russia while also seeking to manage tensions with Beijing. The US diplomat tomorrow is to meet China’s top brass in Beijing, where he is also expected to plead for restraint as Taiwan inaugurates president-elect William Lai (賴清德), and to raise US concerns on Chinese trade practices. However, Blinken is also seeking to stabilize ties, with tensions between the world’s two largest economies easing since his previous visit in June last year. At the
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
Beijing is continuing to commit genocide and crimes against humanity against Uyghurs and other Muslim minorities in its western Xinjiang province, U.S. Secretary of State Antony Blinken said in a report published on Monday, ahead of his planned visit to China this week. The State Department’s annual human rights report, which documents abuses recorded all over the world during the previous calendar year, repeated language from previous years on the treatment of Muslims in Xinjiang, but the publication raises the issue ahead of delicate talks, including on the war in Ukraine and global trade, between the top U.S. diplomat and Chinese