Industry head critical of Italy's 2014 budget
Squinzi says bill doesn't go far enough16 October, 14:47
The budget bill features a 27.3-billion-euro adjustment in the public finances, including spending cuts, over the 2014-2016 period, 11.6 billion euros of which regard next year. Public health care has been spared from cuts, and a feared tax on financial transactions was not in the text. The bill foresees government privatizations to help reduce the public debt, while income and labour taxes are to be cut.
"The steps are in the right direction, but once again they are not enough to make us recover growth," Confindustria President Giorgio Squinzi said at the inauguration of the SAIE building trade fair in Bologna.
"The 2014 budget bill doesn't truly affect the (excessive) cost of labour. We have indicated the tax burden (on workers) as an absolute priority. "What should be done? I'm not the prime minister of this country, but I would like to say that more courage is needed," Squinzi continued.
Squinzi explained that the budget, though constructive, was to close to the "status quo".
"It won't change either the economic performance or the country's outlook for the future," Squinzi said.
Squinzi added that the Confindustria was already in dialogue with the government on the bill and said he hoped constructive amendments would be made as it goes through parliament.
Italy's left-right government said Tuesday that the 2014 budget bill was aimed at addressing the country's economic woes while sticking to EU-mandated targets and keeping market speculation at bay.
Letta said the thrust of the three-year budget was to stoke growth by cutting taxes while limiting spending cuts.
"Enough of the axe-wielding, now we are focusing on growth instead," Letta said.
"For the first time in a long time we have managed to keep accounts straight without hiking taxes," the premier added, stressing that it was the first budget in many years "that doesn't start with cuts requested by Brussels", after Italy recently emerged from excessive-deficit proceedings.
The government said it forwarded the budget bill to the European Commission in the nick of time to meet an October 15 deadline.
European Economic and Monetary Affairs Commissioner Olli Rehn on Monday praised Italy's financial prudence and said Rome even had some margin left for public investment to promote growth and still keep its public spending deficit at or below 3% of the gross domestic product (GDP).
The Italian government has been struggling to keep its deficit at 3% of GDP in order to meet a key European Union target.
"Italy still has a little bit of maneuvering room within the 3% deficit. It's small, but it's there," Rehn said at the end of the European summit of central bank chiefs and finance ministers ECOFIN, held in Luxembourg.
Meanwhile the UIL union, which represents many public workers, threatened to strike and demonstrate over spending cuts and a freeze on public-sector salary rises.
"There will be a significant reduction in taxes for households, workers and firms," Letta said on Monday, adding that the tax burden on businesses would fall by 5.6 billion euros over the three years, and companies would get subsidies if they hired people on full-time contracts.
Italy's overall tax burden would fall from 44% to 43.3% in the three years, Letta said.
At the same time, there would be a 1.6-billion-euro fund to help small and medium-sized firms, as well as more cash for social policies and to help the growing numbers of people falling into poverty.
Another measure that will help get economic activity moving again are subsidies amounting to one billion euros for home improvements and other "green" moves, Letta said.
One billion euros would also be transferred to municipalities to help keep up services.
There would also be a return to setting industrial policy instead of leaving many firms to fend for themselves, with a "control room" at the economy ministry, Letta said.
The budget would amount to an adjustment of 11.5 billion euros in 2014, 7.5 billion in 2015 and another 7.5 billion in 2016, he said.
Health cuts, which had been vehemently opposed by Health Minister Beatrice Lorenzin after reports of a reduction of up to four billion euros, did not featured in the package, Letta stressed.
Another move is the incorporation of a widely hated and recently scrapped property tax called IMU and local rubbish and service levies into a new, lighter tax, to be paid by homeowners and renters, called TRISE.
The bill also allocates 110 billion euros over seven years for projects co-financed by the European Union for territorial cohesion, much of which will be ploughed into less developed areas of southern Italy.
Economy Minister Fabrizio Saccomanni, the main architect of the budget, said the Italian economy had "significant potential for growth in the coming years".