Premier Matteo Renzi on Friday confirmed a 10-billion euro income-tax cut for lower-income earners, funded in part through permanent spending reductions to defence, while insisting that health-care budgets would not be touched.
"I am happy because we have disproved the (ill-wishers) who have often wished that there would be no (financial) cover, and also because this in general begins a process of reorganization of the State," Renzi said after his cabinet approved a major financial decree that included large tax cuts as well as minor government reforms.
The 10 billion euros in income-tax cuts, which will affect 10 million Italians earning between 8,000 and 26,000 euros a year, will be a permanent measure providing approximately 80 euros monthly, effective next month.
The decree, which contained no real surprises, also set a salary cap for senior officials at State-controlled companies of 240,000 euros, adding that he hoped politicians would also consider a similar move.
"The House and Senate will have to decide themselves, but it would be a very nice gesture" if they followed suit, Renzi told a news conference.
The cabinet decree also confirmed a 10% reduction to the Irap regional business tax and released eight billion euros payment of 68 billion euros in outstanding government debts to businesses.
The measures will be covered by government cuts and savings including 6.9 billion euros found for 2014, rising 14 billion euros next year, through such measures as reducing government office space, increasing efficiencies at the local, regional, and national level, plus a deep reduction in the number of government cars in use.
Renzi said those chauffered cars will be slashed to a mere five cars per ministry, and everyone else "can take the bus or walk".
He was adamant that health-care spending would not be reduced, as had been rumoured after draft reports of Friday's decree were released earlier in the week.
"If someone finds the word 'health' in the decree, I will buy him a drink," he said.
Instead, about 400 million euros will be saved from trimming the defence ministry, including 150 million euros from a review of the F-35 fighter-jet program. Other sources will include a new levy on private-sector banks that are parking money inside the central bank, worth an estimated 1.4 billion euros, as well as other savings found for this year in a major spending review exercise led by Commissioner Carlo Cottarelli. In a move towards greater accountability, Renzi also announced that public offices, both at the local and national level, must start publishing their expenses online within 60 days or face sanctions.
"The provision already existed, but without consequences.
Now if a local government doesn't provide all the data, we cut funds," he said.
Friday's decree includes highlights of Renzi's larger Economic and Financial Document (DEF) that aims to kick start the sluggish economy.
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