Reuters reported that Italy’s Cabinet adopted sweeping austerity measures on Friday to cut the fiscal deficit by EUR 45.5 billion and balance the budget in 2013, a year ahead of its previous schedule.
Highlights
Cuts to the budgets of central government ministries, worth a total of EUR 6 billion in 2012 and EUR 2.5 billion in 2013
Funding to town councils, regions and provinces reduced by EUR 6 billion in 2012 and EUR 3.5 billion in 2013
Unspecified changes to the pension system to save EUR 1 billion in 2012
A progressive increase in the retirement age of women in the private sector to 65 from 60 to begin in 2016, instead of 2020 as previously planned.
The retirement funds of public sector employees will be withheld for two years after they leave their jobs
A reduction the "cost of politics" resulting in a halving of elected officials and around 55,000 fewer positions in the apparatus of central and local government.
A "solidarity tax" on high earners, to be levied for two years, as an additional 5% on income above EUR 90,000 per year and 10% on income above EUR 150,000
Increase in taxation of income from financial investments to 20% from 12.5%, excluding income from government bonds
Purchases worth more than EUR 2,500 will no longer be allowed to be made in cash, as a means of curbing tax evasion
There will also be tougher penalties, such as suspension from professional bodies, for failure to issue receipts and invoices
All non religious public holidays, such as the June 2 anniversary of the founding of the Italian Republic, will be celebrated on a Sunday in a bid to increase the number of working days in a year.
The measures, which were passed by emergency decree, must now be approved by parliament within 60 days.
They come less than a month after parliament approved a previous austerity package.
Austerity measures will now total EUR 20 billion in 2012 and EUR 25.5 billion in 2013.
Italian economy minister Mr Giulio Tremonti said the budget deficit will fall to 1.4% of gross domestic product in 2012 from 3.8% this year, and be eliminated in 2013.
(Sourced from Reuters)
