Italy tightens and speeds up austerity measures
Senate to vote on new package today
The Italian government moved yesterday to placate jittery markets by tightening measures in its latest austerity package and seeking a quick vote on the measures, as well as on a balanced budget amendment.
A Cabinet meeting authorised calling a confidence vote on the €45.5 billion austerity package, allowing the Senate to vote today on the measures that should help stabilise the finances of the debt-laden eurozone country.
The government said “the seriousness of the international financial crisis” justified the rushed adoption of the measures, against which unions held a general strike yesterday.
Tens of thousands of workers took to the streets across Italy, shutting down parts of the public transportation system and major tourist attractions such as the Colosseum in Rome.
The final adoption of the austerity package had initially been set for mid-September.
However, the government has been forced to accelerate its adoption and backtrack on changes to its provisions that had damaged its credibility among investors.
After Prime Minister Silvio Berlusconi met with leaders of his ruling coalition yesterday they announced the package would again include a wealth tax and pension reforms and raise the VAT sales tax.
The government also said it would tomorrow endorse balanced budget amendments as part of efforts to regain the confidence of markets. A wealth tax of three per cent on revenues above €500,000 was put back into the package yesterday, after a tax of five per cent had been cut last week under pressure by Mr erlusconi.
The VAT sales tax will go up one point to 21 per cent, according to a statement issued after the ruling coalition meeting. The retirement age for women in the private sector, now at 60, is to rise to 65 years as it is for men beginning in 2014, instead of 2016 as had been planned previously. The measures should help Italy bring its budget back into balance in 2013 instead of 2014.
Meanwhile, apart from a protest in Rome, more than 10,000 were taking part in an anti-austerity demonstration in Florence, and marches were under way in Genoa and other towns and cities across Italy.