ITALY NEWS

Prodi pulls his purse strings

Mini-budget plan leaves few indifferent
(issue no. 37/2006 / July 13, 2006)
Our aim is to consolidate public accounts in a progressive and stable way while paying attention to the needs of families, businesses and workers, said the former EC chief. What we are calling a mini-budget is in reality an engine for igniting economic recovery, he said.

 In a bid to straighten Italys public accounts, the centre-left government of Premier Romano Prodi recently approved an emergency 7-billion-euro sup-plementary budget. Italys deficit has breached the EUs 3 percent limit for the past three years and could exceed 4.6 percent of GDP this year unless tough containment measures are taken. International credit rating agencies have warned they may downgrade the countrys credit ratings unless con-crete action is taken on the deficit and debt fronts.

The package includes plans to increase the powers of the Antitrust Authority and stiffen the fines applied to offending firms; open up the pharmacy sector by allowing supermarkets to sell drugs; liberalise local public services; and abolish restrictions on the number of taxi licences local authorities are allowed to distribute. Prodi went on to stress that cracking down on tax dodgers and eliminating wasteful spending in the public sector were two of the governments key priorities.

Fridays manoeuvre included several measures aimed at curbing tax evasion, such as a norm requiring retailers to inform the tax authorities of their daily takings and another forbidding the use of cash in the payment of fees for lawyers, notaries, doctors, architects and accountants. The centre-right opposition decried the mini-budget as a tax sting and accused the government of creating a false state of alarm over the public accounts.

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