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Govt budget set for approval amid acrimony

Package criticised for being too timid, furore over 'gold rents'

23 December, 12:55
Govt budget set for approval amid acrimony (ANSA) - Rome, December 23 - The government's 2014 budget package looks set to win final approval with a confidence vote in the Senate on Monday, amid acrimony about its alleged shortcomings and a furore over rental agreements that cost the Lower House around 22 million euros each year.

Monday is set be a busy day for Premier Enrico Letta's left-right coalition government, which has also made a vote on another piece of legislation, the so-called Save Rome decree that features a hodgepodge of measures including assistance for the cash-strapped capital's council, a confidence motion.

The budget package has come under heavy fire, with business associations, trade unions and opposition parties saying it fails to do enough to revive the recession-battered Italian economy and is too timid with cuts to labour and income taxes.

Letta has hit back, saying he cannot be "Father Christmas" with public money and arguing that the bill should be praised for presenting tax cuts, albeit modest ones, after years of austerity while keeping Italy's budget-to-deficit ratio within the 3% threshold allowed by the European Union and taking action to reduce a massive public debt of over two trillion euros. The premier 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.

The budget also includes a new tax on municipal services to replace the unpopular IMU property tax, which was scrapped for primary residences earlier this year.

The association of Italian town and city councils ANCI, which on Thursday appealed to President Giorgio Napolitano to intervene, said local governments face a collective shortfall of 1.5 billion euros due to the effects of the budget. The budget needs to be approved in parliament before the end of the year so the government is using confidence votes to speed its passage.

It passed a confidence vote in the Lower House last week.

The premier has acknowledged there is widespread social hardship in Italy, with unemployment at record levels of over 12% as the country shows timid signs of emerging from two years of recession, the longest downturn since World War II.

But he has also stressed that "wrecking the accounts" would only alarm investors and cause the borrowing costs to soar on Italy's public debt, which stands at around 133% of GDP.

Italy came close to a Greek-style financial meltdown in 2011, when uncertainty about the ability of the government of ex-premier Silvio Berlusconi to put the public accounts in order contributed to interest rates on 10-year bonds climbing over 7%.

The animosity over the budget has been heightened over the removal of a measure from the Save Rome decree that would have enabled the House to cancel costly 'golden rent' contracts it has for offices outside the parliament building in central Rome.

The Northern League and the anti-establishment 5-Star Movement have threatened to bog down the work of parliament unless the measure to scrap the contracts is reinstated.