Friday, July 1, 2011

Italian cabinet approves austerity plan

Italian Prime Minister Silvio Berlusconi

Source: Press TV

The Italian cabinet has adopted an austerity plan aimed at protecting the country from Greek debt crisis and avoiding the budget deficit in 2014.

The measure approved on Thursday, which includes a tax hike on financial transactions, a cut in ministers' pay and an extension of the current freeze on public sector salaries and hiring, aims to save EUR 47 billion and reassure investors, the Press TV correspondent in Rome reports.

The budget cuts of EUR 47 billion will be implemented over 4 years, EUR 1.5 billion this year, EUR 5.5 billion next year, EUR 20 billion in 2013, and another EUR 20.5 billion in 2014, the government spokesman announced in a press conference on Thursday.

The government is also expected to reduce income tax and crack down on tax exemptions and evasion.

Parliament approval is needed before the austerity plan takes effect.

Moody's and Standard & Poor's rating agencies have warned the country's credit rating could be downgraded because of its inability to pass reforms to bring down its debt mountain and the country's low growth rate, unless Rome takes proper measures to cut its public deficit.

By 2013, there will probably be a new government which will face the EUR 40 billion budget cuts in 2013 and 2014, which will certainly harm a lot of families in Italy.

Prime Minister Silvio Berlusconi's government has said that it is going to reduce the budget of government ministries and local authorities plus a reduction in tax breaks for companies and families, but there will be no cuts on education, research and culture.

The budget is the latest test for Berlusconi, who suffered heavy defeats in local elections and four referendums over the last month. His approval ratings have been sinking over a series of corruption and sex scandals, and a stagnant economy.

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