New austerity plan as Italians strike

Elizabeth Fournier
ITALY made yet more changes to its proposed austerity package yesterday, hiking VAT and planning a balanced budget amendment as hundreds of thousands of citizens went on strike to protest against the measures.

As part of the effort to balance the country’s budget by 2013, Prime Minister Silvio Berlusconi’s government yesterday said it would up the basic rate of VAT by one percentage point to 21 per cent, with an extra three per cent levy for high earners.

The additional wealth tax will apply to those earning more than €500,000 (£438,830) per year.

Other measures floated by Berlusconi’s cabinet include raising the retirement age for women working in the private sector to 65 years two years earlier than planned, in 2014.

The package could be passed today, as a vote of confidence is called in the Italian Senate ahead of a meeting of the governing council of ECB, scheduled for tomorrow.

Approval in the lower house would then be needed for the final plans to be passed.