Courtesy of Mish.
With a fragile coalition that is barely hanging on by a thread, a new battle over tax hikes and a stick it to the rich mentality is about to set in.
Needing revenue to meet its budget deficit targets, Italy’s Finance Undersecretary Says Budget Crunch May Require More From Rich.
Italian Finance Undersecretary Pier Paolo Baretta said the government is considering shifting the tax burden to the wealthy in order to satisfy demands for broad-based fiscal easing and meet its 2013 deficit target.
“The truth is we’ve got a real bottleneck of issues to deal with” this year, Baretta said yesterday in an interview in his office in Rome. In order to raise funds, Italy is seeking spending cuts and may limit the tax deductions higher-income households take on medical visits and other expenses, he said.
Prime Minister Enrico Letta is bracing for a tax-policy showdown that threatens to destabilize his two-month-old parliamentary coalition. Lawmakers in Letta’s alliance have demanded tax cuts and spending measures that, taken together, total more than 7 billion euros ($9 billion). That’s more than Italy can afford as its recession deepens, Baretta said.
Letta, 46, is squeezed between his allies’ calls for stimulus and his commitment to European Union allies to bring the budget deficit below 3 percent of gross domestic product. Baretta, a member of Letta’s Democratic Party who serves under Finance Minister Fabrizio Saccomanni, is helping identify options for savings and additional revenue. The final decisions will be made by Letta’s Cabinet in September or October.
Silvio Berlusconi, the three-time premier and a partner in Letta’s coalition, has pushed for the abolition of property taxes on primary residences, which would cost the state about 4 billion euros annually. Other members of the coalition have called for the cancellation of an increase to the value-added tax planned for Oct. 1. Postponing the VAT increase by three months would cost the government about 1 billion euros.
Italy’s Parliament Shut Down By Berlusconi Over Court Ruling
The Huffington Post reports Italy’s Parliament Shut Down By Berlusconi’s People Of Freedom Party Over Court Ruling
Silvio Berlusconi’s party boycotted a summit of Italy’s fragile coalition government and blocked parliamentary activity on Wednesday in protest against a supreme court decision to fast track a ruling that could ban him from public office.
Legislative activity in both chambers of parliament was suspended for a day because of the protest by Berlusconi’s People of Freedom (PDL) party, one of the two main partners in Enrico Letta’s left-right coalition government.
The court decision has aggravated tension in the squabbling coalition which was already under fire for the slow pace of reforms desperately needed to boost recovery from the worst recession since World War Two.
Beppe Grillo, leader of the populist 5-Star Movement which stunned Italy by winning an unprecedented quarter of the vote in a February election, said Italy was heading for catastrophe because of the government’s failure to take extraordinary measures to tackle the economy….
