Italy in Crisis

Susan Brannon
13 August 2011

Florence - Italy has been under duress with it's economy for quite a while now.  However, most Italians take a month long holiday in August and Berlusconi did not want to discourage the Parliament members to stay in Rome.  After everyone jotted off to the local beaches and private boats, the  European Union and European Central Bank started to put pressure on Berlusconi that now was not the time for a sunny holiday.  Italy is in a crisis.

Berlusconi cut his holiday short under the pressure and met with the Minister of Economy Robert Calderoni and Maurizio Sacconi.  After many long nights and busy days, they announced the proposed plan that will be set before the Senate on August 22 and before the aula on the 5 and 6 of September.  The process is not like the American process with not really deciding anything but passing along the responsibility to the new

The cabinet of ministers passed the new budget on Saturday 13 August.  The Minister of Finance said, "It is vital that we balance our budget"  Berlusconi said, "Our hearts are dripping with blood, we never put our hands in the pockets of the Italians, but the crisis is global, look at the U.S."  He also thanked Tremoniti, "They worked day and night."  Twenty billion in 2012 to 25.5 in 2013.  Knight responded that "It is a balanced decision"

The committee's decision will affect just about everyone in Italy, from the retirement holders, to the rich. Here is the latest rundown:

Taxes

    * Increase of payroll tax: by 5% to those that make 90,000 Euros to 150,000 Euros and 10% to those that make 150,000 Euros or more for the next two years.

    * Increase in personal income tax from the current 41% for income above 55,000 Euros

    * Robin Hood tax - A tax on the energy sector, details are not given as of yet.

Government

    * Parliament contributions:  10% for incomes above 90,000 and 20% for those who make over 150,000.  Reducing the Parliament members privileges (not including economy class airline tickets)  The removal of around 54,000 parliament seats.

    * Public workers: Must meet the goals to reduce costs otherwise they can loose the 13th month of payment

    * TFR payment with a 2 year delay for the severance pay of public workers.

    * Ministers - Are expected to cut 6 billion euros in 2012 and 2.5 in 2013

    * Localities:  Money transfers will be cut to 6 billion in 2012 and 3,5 in 2013. The health budget will not be touched.  The Regions will have to cut 1 billion less than the Localities.

    * Providences:  Suspend provenience with populations under 300,000 (total of 38) to be imposed after the next census.  and merge with the municipalities for under 1,000 population.  This will reduce the amount of state workers by 50,000.

    * No Cuts to salaries of civil servants.

    * Public Services:  Privatization and liberalization of public services will be encouraged.

    * FAS Fund - One year reduction of Fas, for underdeveloped areas.

    * Welfare reform:  For 1012 attend to achieve a savings of 4 billion is possible.

Social

    * Raise retirement age for women: From 2015 raise the age of retirement to 65 to those who work in the private sector

    * Retirement age:  by 2027 slowly raise the retirement age to 65.

    * Midweek Holidays - Will be moved to Monday as in the rest of Europe.

Business:

    * Receipts:  The receipts need to be traceable, for those issued over 2,500 euro, if they failure to issue receipts, the business with be threatened to close.

    * Reduce the amount of Looses to a maximum of 62.5 %

    * Self Employed - Increase personal income tax from 41% for incomes over 55,000 euros.  It is scheduled for 2-3 years, but may remain permanent.

    * Games and Tobacco - A new excise tax on games and tobacco, to what extent has not been decided.

    * Investment income:  Increase to 20% of all taxes on investment income, excluding interest of bonds that remain at 12.5%.

    * No taxes on real estate assets


The Italian response to this proposal is not a positive one it seems that everyone from every sector is complaining; from the ministers, the mayors, companies and public employees.  The public employees plan a union strike on September 9 for two hours. Minister Calderoli does not agree with abolishing the provinces.  Nicola Zingaretti, the president of the province of Rome says, "The move will affect the economy well beyond the Roman planned cuts to transfers to local authorities.  All the measures provided for the public service which are added to those already made in recent months in particular it will weigh on our economy as less liquidity available for many families"  Bonelli, of the Green Party feels that the maneuver will be a social disaster "that will take over the poverty line to more than a million Italian households."

For two to three years the white and blue collar workers have lost their jobs, with factories closing and outsourcing, many small businesses close their doors on every city street and more and more shops are empty.  Tourism is way down this year and the shop owners that were depending on tourism to make it through the year are watching over their empty shops.  University students cannot find work after graduation and have held many protests throughout Italy and are worried that this bill does not help them  with their plight.

Some Italians feel a bit patriotic with the removal of provinces' they are historical and they are territorial, in fact the Province of Benevento is a year older than the unity of Italy.  The province of Siena is under threat because they have close to 300,000 inhabitants, but it is not quite enough.

In the months to come, I expect turmoil and conflict between the government, the cities leaders, the general public and the public workers.  It is not easy cutting down from flying first class to economy.