“Monti’s polices will bring Italy to default. This budget is worse that one that Berlusconi would have presented,” said Paolo Ferrero, leader of Communist Refoundation at the conclusion of the party’s congress in Naples yesterday.
The budget package presented by Italy’s pm Mario Monti is a “hammer blow” for Italians, it is “recessive and doesn’t contain any measures that are necessary” to face the crisis, he said.
The three union confederations, all now planning strikes on December 12, were united in opposition to the austerity measures, Ferrero noted.
“We must overturn the polices of the European Central Bank and the Directorate aroud Merkel,” he added, describing the financial and economic crisis facing the Eurozone as “structural”.
“We have to use the “too big to fail” to force Germany to change its policies and say with clarity that the Italian government will not pay the debts of German banks,” added Ferrero.
Monti’s budget has been widely criticised for being so austere as to send Italy’s zombie economy into deep recession.
It is also seen as unfair by three out of four Italians who believe it “could have been done in a different way,” according to a poll by IPR Marketing.
The budget includes swinging cuts to health budgets and a pension “reform” that will raise the retirement age for many workers, end cost-of-living adjustments on most pensions and make payouts based on contributions rather than final salary.
There will be rises in valued added tax and the reintroduction of a tax on properties that will disproportionately hit the middle and working classes in a country where 75%-plus own their own homes.
And while there will be a new tax on luxury goods like boats and expensive cars, calls for a more encompassing “wealth tax” that would have tapped into Italy’s Euros 10 trillion in private wealth (five times the country’s public debt) have not been acted on. This is because they are opposed by the party of recently deposed premier Silvio Berlusconi, the richest man in Italy.
Also, plans to raise the income tax rate on top earners have also been dropped.
The budget package is divided into 20 billion euros of budget tightening and an additional 10 billion euros that the government says will used to boost growth and employment.
There will be corporate tax breaks aimed at spurring hiring and encouraging private financing of infrastructure projects, although billions of euros in state support has been given to private companies over the past decade and yet Italy’s economy has barely grown at all.
Monti’s Cabinet passed the budget package by decree on December 4, meaning the plan takes effect immediately and Parliament has 60 days to approve the package for it to remain in effect. Both houses of Parliament will vote before the Christmas recess.