Domenica, 23 Settembre 2018
ROME

>>>ANSA/Govt cuts income tax, but VAT set to rise

English
© ANSA

(ANSA) - Rome, October 10 - Premier Mario Monti said early
on Wednesday that his government will cut income tax in the two
lowest bands next year after a tense Cabinet meeting on budget
measures that ran late into the night.
But he added that a 2% increase in value added tax
scheduled for July 2013 that the government had hoped to avoid
will be halved to 1% rather than scrapped completely.
So vat will go up from 10% to 11% in the lower band and 21
to 22% in the top band.
Monti stressed that the budget measures, contained in the
so-called Stability Law, did not amount to another austerity
package like the tax hikes and spending cuts his emergency
government passed last year to put Italy on course to balancing
its budget in structural terms next year.
But they still featured new cuts, including a reduction of
over one billion euros In health spending that reportedly caused
Health Minister Renato Balduzzi to threaten to resign at the
cabinet meeting.
Balduzzi denied that the meeting had been bad-tempered, but
said he would continue to lobby for the cuts to be reviewed as
the bill goes through parliament.
"I will continue to present the reasons why plans should be
reconsidered," the minister said.
Monti, on the other hand, expressed satisfaction at the
income-tax cuts, which will primarily benefit lower earners,
saying they showed the policies of his administration of
non-political technocrats were working.
"Today we can see and feel that budget discipline pays and
it is beneficial," Monti told a press conference.
"We can allow some moderate relief (with moves such as) as
start in the reduction of income tax".
The income-tax rate will be cut to 22% from 23% for those
earning less than 15,000 euros per year, and to 26% from 27% for
salaries between 15,001 and 28,000 euros, while the top three
bands will remain unchanged.
Monti's austerity measures helped stop Italy following
Greece on the path towards a default on its massive national
debt but they also have deepened the recession the country
slipped into last year.
Italy's trade unions gave a mixed reaction to the
government's budget bill.
"It's a budget that will depress the economy," said Susanna
Camusso, the head of Italy's largest union confederation, the
left-wing CGIL.
"The news is that there will be an increase in VAT, an
increase that will only be partially compensated by the cut in
income tax".
She added that people on benefits will see their cost of
living rise.
However, Raffaele Bonanni of the more moderate CISL praised
the measures.
"It's a very important signal because for the first time in
many years the income tax of low earners is being lightened a
little," said Bonanni.
The centre-left Democratic Party (PD), which is one of the
three main political groups supporting Monti's emergency
government and is top of the polls ahead of next year's
elections, said health and education cuts needed to be amended.
"The reduction of the lowest bands of income tax is very
good, but I think there are things to fix regarding two points,"
said PD chief Pier Luigi Bersani.
"It's necessary to have a very precise look at the effects
of the health cuts and I fear that the jobs of 6,300 to 6,400
teachers will be cut in schools".
Industry Minister Corrado Passera said the budget bill was
"a good starting platform" for parliament to work on.

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