Berlusconi Embraces Tax Hikes to Save Italy

By:  Bruce Walker
08/16/2011
       
Berlusconi Embraces Tax Hikes to Save Italy

The Italian government revisited its plans for handling the nation’s gaping public debt problem. On Friday, Prime Minister Silvio Berlusconi said that tax increases and spending cuts would both be in the new austerity plan.  The tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments.  More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.

The spending cuts were directly largely at local government. Giuseppe Castiglione, head of the Union of Italian Provinces, almost immediately bemoaned the government cuts, which he said would fall most heavily on direct services to Italians: "When you talk about municipalities, you're talking about social services, when you talk about provinces, you're talking about schools, security at school, local roads."

The Italian government revisited its plans for handling the nation’s gaping public debt problem. On Friday, Prime Minister Silvio Berlusconi (pictured) said that tax increases and spending cuts would both be in the new austerity plan.  The tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments.  More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.

The spending cuts were directly largely at local government. Giuseppe Castiglione, head of the Union of Italian Provinces, almost immediately bemoaned the government cuts, which he said would fall most heavily on direct services to Italians: "When you talk about municipalities, you're talking about social services, when you talk about provinces, you're talking about schools, security at school, local roads."

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