Premier Matteo Renzi denied Friday that his plan for 10-billion euros in income-tax cuts will be partly funded by reduced health-care spending, just after his health minister promised "a big fight" against any encroachment on her department's budget.
In a tweet hours before cabinet was expected to approve his tax-cut decree, Renzi denied reports that his cuts aimed at lower-income earners would come out of health budgets. "There are no cuts to the health sector," Renzi said via his Twitter account, @matteorenzi, ahead of Friday's cabinet meeting.
"There are no cuts to teacher's salaries. There are no across-the-board cuts".
He also denied reports higher-income earners will be slapped with stiffer levies to pay for his plans, part of an ambitious program to boost the weak recovery after Italy emerged from its longest postwar recession last year. Media reports allegedly based on early drafts of Renzi's program had suggested such unpopular measures, including a cut of about 2.4 billion euros over two years from health budgets, leading Health Minister Beatrice Lorenzin to warn that she will fight to protect her department. Renzi has promised that the tax cuts will mean up to 80 euros more in the monthly pay packets of people earning less than 1,500 euros.
The early drafts suggested that the workers who will derive most benefit will be those earning between 18,000 and 24,500 euro gross per year.
They will get an extra 77.5 euros per month from May, which should go up to 79.1 euros in 2015, according to the drafts.
There will also be measures to increase the income of people who do not earn enough to reach the minimal tax threshold, while there be no benefits for people with salaries of over 28,000 euros per annum, reports said.
Lorenzin has said her ministry is willing to contribute to a government savings review by promoting better planning and efficiency, but reiterated Friday that she was against across-the-board cuts.
"I'll fight right up to the last minute against health cuts," Lorenzin, a member of the New Centre Right, a junior partner in the coalition government, told a news conference.
"The national health system cannot stand across-the-board cuts...you cannot go and touch people's primary services".
Renzi also denied speculation that increases in levies on the wealthy will help finance cuts in income taxes for lower earners. "This money is not coming from increases in taxes for those who earn more," Renzi told La Stampa. "There are interventions just for this year, such as 1.4 billion euros (in higher taxes on bank's stakes in) the Bank of Italy. But it (primarily) stems from a spending review that will give six billion (euros) this year," said Renzi.
The tax cuts will instead be covered from other sources, including a new levy on private-sector banks parking money inside the central bank as well as savings found for this year in a major spending review exercise led by Commissioner Carlo Cottarelli. The cabinet decree is also expected to feature a cap on the salaries of top public-sector managers, judges, professors and military officials pegging them to the earnings of close to a quarter of million euros of President Giorgio Napolitano.
The package may also include defence cuts to help raise funds to cover the new fiscal measures.
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