Monti Presents 30 Billion-Euro Italian Budget Plan: Highlights
Prime Minister Mario Monti announced 30 billion euros ($40 billion) of austerity and growth measures through 2014 aimed at shoring up Italy’s finances and balancing the budget in 2013. Here are key measures from the budget plan approved by the Cabinet that Monti is presenting to both houses of Parliament in Rome today.
*The plan includes 20 billion euros in austerity measures and another 10 billion euros in steps aimed at boosting growth and employment. Spending cuts amount to more than 12 billion euros, and 4 billion euros in savings come from welfare measures and the elimination of some tax breaks approved by the previous government.
*Pension revamp: Pensions will be tied to contributions rather than salary at retirement starting in 2012. Larger pensions will be de-linked from inflation. The retirement age will be raised to 62 years for women and 66 for men, with incentives to work until 70 for both. Women’s retirement age will be aligned with that of men starting in 2018. Early retirement will be penalized. Before being able to retire, men will need 42 years of contributions to the social security system and women will require 41 years, from the current 40 years for both.
*Reintroduction of a tax on primary residences dropped by the previous government, along with a reassessment of registered property values.
*The value-added sales tax will be raised 2 percentage points from September 2012, if necessary.
*State guarantee of bank-bond sales.
*A fee on the balance of securities held in trading accounts, not applicable to government bonds.
*One-time charge of 1.5 percent applied to capital repatriated in a recent amnesty program, in addition to the 5 percent fee originally assessed on the funds.
*Company tax amounting to 5.5 billion euros. Companies that hire workers will be able to fully deduct the regional IRAP levy that is calculated on the basis of revenue and headcount rather than profitability.
*The government will refinance a guarantee fund backing about 20 billion euros in credit for small and medium-sized enterprises.
*Measures against tax evasion include requiring electronic payment for transactions above 1,000 euros. The current limit is 2,500 euros. Fighting evasion is a “priority” for the government, which will also encourage banks and credit-card companies to lower their transaction fees, Monti said.
*Tax on luxury goods such as private airplanes, sports cars and yachts.
*Liberalization of shop hours and the retail sale of some medicines.