ITALY NEWS

Austerity, Italian style

Government passes drastic budget cuts
(issue no. 148/2011 / September 15, 2011)

Among the steps Italy's government has taken in a new era of austerity are constitutional amendments mandating that state budgets must be balanced and the elimination of Italy's provinces with fewer than 300,000 residents. These two bills, which passed from the Senate to the House on September 8, were the final measures of the 54.265-billion-euro austerity package that Italian government worked on through summer, in the wake of hostile markets and low investor confidence levels.

 

Italy's financial and economic situation was so dire over the summer that the European Central Bank stepped in to avoid default by buying up Italian bonds in an effort to boost yields and keep down the costs of servicing Italy's massive public debt.

 

The austerity package sets a goal of balancing the national budget by 2013. Other measures in the package include a crackdown on tax evasion; changes to the pension system; a 3 percent tax increase on those who earn over 300,000 euro; a 1 percent hike in the value-added tax, now at 21 percent; additional fees for certain healthcare services (see page 4); and laws making it easier to fire workers.

 

Officials from the European Union called the package ‘a step in the right direction,' while Italy's major labour unions organized a nation-wide protest on September 6 that attracted tens of thousands. 

 

 

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