Italy's regional governments on
Thursday led the backlash against Premier Matteo Renzi's 2015
budget bill.
The bill, which Renzi presented Wednesday, features a
36-billion-euro budget adjustment, with 18 billion euros in tax
cuts and 15 billion in spending reductions.
The regional governments, which have seen their budgets
cut severely in recent years as part of austerity measures, are
being asked to collectively stump up four billion euros of those
spending cuts, with another 1.2 billion coming from city
councils.
"The budget is unsustainable for the regions, unless you
address health spending," said Piedmont Governor Sergio
Chiamparino, who is also chair of the conference of the regions.
Governors have also spoken of the possibility of having
to raise local taxes.
Renzi, on the other hand, hailed the package as "the
biggest tax cut in the history of the (Italian) republic" to
help put the struggling economy back on the path to recovery.
He also hit back at the governors.
"We'll meet the presidents of the regions. But let's not
fool ourselves," Renzi said via his Twitter account,
@matteorenzi.
"If we want to cut taxes, everyone has to reduce spending
and demands".
He also told the regions to "start with their waste,
rather than threatening tax increases".
Chiampiarino retorted: "Those w3ords are offensive, can't
there be some waste to be found in ministries?".
The budget bill features an extra two billion euros for
the national health system fund for 2015.
But it also has a "health-cut" clause for regional
governments that warns if they fail to find the four billion
euros in savings, the national government will cut health
budgets.
Economy Minister Pier Carlo Padoan said Thursday that the
2015 budget will start tackling Italy's jobs crisis, with
unemployment over 12% and the jobless rate for under-25s over
40%.
"The budget law will create jobs," Padoan told the Radio
Anch'io station.
"There is money for those on low incomes".
Five billion euros of the tax cuts will go to the
abolishment of the labour-tax component of regional business tax
IRAP.
The bill also scraps social contributions for new workers
hired on open-ended contracts for their first three years with a
company up to a limit of 6,200 euros a year, according to a
draft version of the bill seen by ANSA on Thursday.
Around 9.5 billion euros of the tax cuts will go to
finance the 80-euro-a-month income tax bonus for low earners
that Renzi introduced earlier this year.
Consumer groups and trade unions shared the regional
governments fears about the budget on Thursday.
The "recessionary" measures in the budget "hide a sting on
consumers," by forcing regional and local government to raise
levies on health care and other services, said a statement from
Elio Lannutti, president of ADUSBEF, and Rosario Trefiletti,
president of the Federconsumatori.
Susanna Camusso, the head of the CGIL, Italy's largest
trade union federation, said the measures "do not respond to a
real emergency in the country which is to create jobs".
Unions representing public-sector workers said the budget
includes "wicked" cuts that will bring the public sector "to its
knees" and lead to higher taxes at the local level.
In contrast Giorgio Squinzi, head of industrial employers'
Confindustria, said the budget featured "a whole series of
measures that firms have been waiting for, for years".
While the domestic front is in ferment, there is
speculation that the European Commission may not see the budget
plan as compatible with the EU's Growth and Stability Pact and
ask for corrections.
Renzi said that around 11 billion euros of financial
coverage for the cuts will come from allowing Italy's
deficit-to-GDP ratio to drift up towards the 3% threshold
allowed by the EU.
But the EC may decide that this means Italy is most doing
enough to bring down its massive public debt of over two
trillion euros.
Renzi, who has been leading calls for the EU to focus more
on growth after years of painful austerity and wants greater
flexibility in the application of the EU's budget rules,
appeared to anticipate possible criticism from Brussels.
The said the new lineup of the European Commission must be
able to adapt policies to the current economic situation.
"The new heads (of the Commission) must not just simply be
new names, they must also interpret a new period," Renzi told
the Asia-Europe Business Forum in Milan ahead of the Asia-Europe
Meeting (ASEM) of leaders in the northern city.
"We either get out of this together or there'll be no
winners of the crisis".
Italy has told the European Commission that it will reduce
its "structural" deficit by 0.1% of gross domestic product
between 2014 and 2015 in the draft budgetary plan it sent
Brussels.
According to some reports, the EC wants a much bigger
reduction in the structural deficit, which, unlike the nominal
budget deficit figure, is adjusted for the business cycle.
The draft budgetary plan said that the structural deficit
will come down by 0.5% of GDP in 2016.
Renzi's government recently said in the revised version of
its three-year economic blueprint, the Economic and Financial
Document (DEF), that it will not be able to balance the budget
in structural terms until 2017, one year later than its previous
target.
ALL RIGHTS RESERVED © Copyright ANSA
