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Italy's budget package moves to floor of Lower House

Changes to web sales tax included in fiscal bill

18 December, 13:26
Italy's budget package moves to floor of Lower House (ANSA) - Rome, December 18 - The Italian government's budget package for 2014 was set to arrive on the floor of the Lower House Wednesday after it gained approval - with some significant amendments - from the House budget committee.

Premier Enrico Letta's coalition government is working to see its budget bill, which has been criticized for not doing enough to stimulate growth in Italy's struggling economy, passed before the end of the year.

The budget includes small tax cuts and Letta has promised that a portion of future savings, which the government is confident it will find from a spending review as well as a crackdown on tax evasion, will be used to further reduce taxes on labour.

Still, several measures in the budget package have triggered debate and even anger as late Tuesday night, some members of the anti-establishment 5-Star Movement (M5S) and ex-premier Silvio Berlusconi's Forza Italia (FI) party walked out in protest.

One of the more controversial measures was a tax on web sales, and Matteo Renzi, the newly elected secretary of Letta's Democratic Party (PD), also objected to the measure that would affect Internet sales by companies, many international, of products to Italian customers.

As a result of the broad-based political disapproval, the House budget committee reduced the web tax, to avoid discriminating against businesses that operate online.

An amendment to revive a so-called "Tobin tax" on financial transactions was also dropped.

Italy's worst recession since the Second World War has greatly reduced the government's room to maneuver financially, but Letta said Wednesday that he sees the seeds of recovery are beginning to sprout.

After eight consecutive quarters of deep losses in the country's gross domestic product (GDP), flat results in the July-September period with respect to the previous three months, was seen as a dramatic improvement.

In the fourth quarter, the government forecasts that Italy will return to positive growth.

"The fall in GDP has stopped and the interest rates (on Italy's huge public debt) have come down by a significant degree," said Letta.

He added that he was confident Italy's economy can growth 1% next year and 2% in 2015.

"(That) is a goal that is within our reach if the interest rates remain low, confidence in Italy remains strong and, obviously, the public accounts stay in order," Letta told a meeting of Italian ambassadors.

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