Monti to Increase Gasoline Taxes to Help Quake Relief

Italy Quake Leaves Thousands Braving Aftershocks in Tent Cities
More than 14,000 have been forced to leave their homes and estimates of the damage have risen to the hundreds of millions of euros. Photographer: Olivier Morin/AFP/Getty Images

Prime Minister Mario Monti’s government extended a state of emergency after two fatal earthquakes in northern Italy and will raise gasoline taxes, Europe’s highest, to help fund quake relief.

Monti’s Cabinet in Rome today agreed to expand the emergency zone beyond the Emilia-Romagna region after two earthquakes in the past 10 days killed 24 people and forced more than 14,000 people from their homes. Farmers lobby Coldiretti said the agriculture industry alone suffered more than 500 million euros ($621 million) in damages, while employers group Confindustria estimates total losses at “several hundreds of millions.”

The Cabinet approved an increase of 2 euro cents per liter of gasoline to help fund the quake aid. Savings from a review of government spending will also be used to help the region. Those funds were earmarked to allow the government to avoid raising Italy’s value-added tax rate to 23 percent from 21 percent as part of its effort to eliminate the country’s budget deficit.

Italy’s economy already is mired in its fourth recession since 2001. Consumer spending has been depressed by tax increases included in Monti’s austerity package that aimed to convince investors the government can tame Europe’s second-biggest debt and bring down borrowing costs.

Tax Increase

The government’s finances are solid enough that it can still avoid the sales tax increase this year, said Minister for International Cooperation Andrea Riccardi.

The death toll rose to 17 in yesterday’s 5.8 magnitude quake, which came nine days after a 5.9 magnitude temblor killed seven. More than 14,000 have been forced to leave their homes and are sleeping in tent cities and public schools.

Italy suffers about 2,000 earthquakes a year with more than 3 million people living in seismic areas, according to the National Council of Geologists. Almost half of Italy’s territory is at risk of a quake, with more than 6 million buildings in the seismic areas, the group said.

The government today also agreed to suspend tax collection in the region until September and allow residents whose homes were affected by the quake to delay mortgage payments, the Cabinet statement said.

Fiat SpA’s sports-car makers Ferrari SpA, based in Maranello near Modena, and Maserati SpA suspended operations yesterday at their factories in the region. The plants reopened today.

Factories Collapse

The worst damage was reported near the epicenter surrounding towns including Cavezzo, Medolla and Mirandola, Emilia Romagna’s administration said in a statement. Two factories in the cities of Mirandola and Medolla were reduced to rubble. A building in San Felice Sul Panaro collapsed, killing three, one day after it reopened following the first quake.

Yesterday’s quake was felt throughout northern Italy, including the financial capital Milan, where some buildings and schools were evacuated, and as far south as Tuscany and Umbria. The May 20 disaster, centered near the town of Finale Emilia, toppled structures across the region, including two factories where four workers were killed.

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