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Monti's govt could face rebellion over budget measures

PD won't vote for education cuts, PdL against raising VAT

22 October, 10:59
Monti's govt could face rebellion over budget measures (ANSA) - Rome, October 22 - Premier Mario Monti could face a rebellion from the parties that support his emergency executive over the budget measures contained in its so-called Stability Law.

Monti on Monday is set to start a series of meetings about the budget with the leaders of the three main groups his technocrat administration relies on for support in parliament - ex-premier Silvio Berlusconi's centre-right People of Freedom (PdL), the centre-left Democratic Party and the centrist UDC.

The package features reductions in income tax in the two lowest bands and a series of cuts that will hit sectors including health and eduction.

It also features a 1% increase in value added tax, rather than a 2% hike scheduled for July 2013 that the government had said it hoped to avoid completely, and a reduction in tax deductions for the current tax year - which effectively makes this a retroactive measure.

PdL Secretary Angelino Alfano said at the weekend raising VAT and altering tax deductions would constitute a "betrayal" of the pact between the State and the public.

PD leader Pier Luigi Bersani, meanwhile, said his party would not vote for the education cuts.

Bersani recently said he feared the cuts would cost the jobs of over 6,000 Italian school teachers. Monti's government has said it is willing to accept some amendments to the Stability Law during its passage through parliament. The premier has stressed though that the measures do not amount to another austerity package like the tax hikes and spending cuts his government passed last year to put Italy on course to balancing its budget in structural terms next year and take the country out of the centre of the eurozone crisis.

The income-tax rate will be cut to 22% from 23% for those earning less than 15,000 euros per year, and to 26% from 27% for salaries between 15,001 and 28,000 euros, while the top three bands will remain unchanged.

VAT, on the other hand, will go up from 10% to 11% in the lower band and 21 to 22% in the top band.

The cuts include a reduction of over one billion euros in health spending.