Sunday, August 14, 2011

Italy introduces additional €45.5 billion cuts

Italian Prime Minister Silvio Berlusconi

Source: Press TV

Rome has approved a new emergency 45.5-billion-euro austerity plan in response to demands by the European Central Bank (ECB) to balance Italy's budget by 2013.

The Italian government approved the emergency package in line with the ECB request on Friday, despite strong disagreement and resistance from local government officials who maintain that new austerity measures "will be unjust and damaging to economic growth," AFP reported.

The Cabinet approved 20 billion euros in cuts for 2012 and another 25.5 billion euros for 2013.

The package will impose measures in addition to the 48-billion-euro austerity package introduced in July to balance the budget.

"It wasn't easy. We're personally pained to have taken these measures, but we are satisfied," said Prime Minister Silvio Berlusconi in a news conference following heated talks with the opposition, regional governors and big city mayors.

"Our hearts are bleeding. This government had bragged that it never put its hands in the pockets of Italians but the world situation changed," added Berlusconi, insisting that the emergency measures were "fair."

The package includes an extraordinary "solidarity" tax for high-earners that earn over 90,000 euros a year, according to which they have to pay an additional five-percent income tax for the next two years. Those earning over 150,000 euros a year are to pay an additional 10-percent tax on their income.

Economy Minister Giulio Tremonti assured Italians that there were "no cuts for schools - whose services took a hit in previous cuts - or the national health system, which was hit in austerity measures approved by lawmakers in July."

Tremonti added that the approved measures "will cut the budget deficit to 1.4 percent of the gross domestic product in 2012 and balance the budget in 2013."

Italy's budget deficit currently stands at 3.8 percent of the country's GDP.

The austerity package will have to gain final passage by Italy's parliament

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