Economy minister defends new budget amid criticism

Italian Economy Minister Vittorio Grilli on Tuesday spoke out in defence of a new budget proposal currently before parliament amid ongoing criticism of the measures. Grilli said the so-called Stability Law was set to benefit 99% of taxpayers, with those with the lowest income seeing the biggest advantage as a result of reductions in income tax in the two lowest bands. The measures would translate into ''an average benefit of 160 euros per capita'' and therefore into greater disposable income and personal spending power as a motor for growth, the minister told a parliamentary hearing. Concerning the decision to raise VAT, ''those who avoid paying income tax cannot avoid paying IVA and this is a further element of equity,'' Grilli said. The new budget contemplates raising two VAT levels respectively from 10 to 11% and from 21 to 22%, affecting 50% of goods and services according to the economy minister but 80% according to the national statistics agency Istat. President of Italy's Audit Court Luigi Giampaolino instead told the House Budget Commission on Tuesday that the bill is unfavourable to taxpayers in the lowest income brackets, namely the 20 million Italians who declare up to 15,000 euros a year. Giampaolino also warned of the danger of hikes in property and local municipal taxes. Pier Luigi Bersani, Secretary of the centre-left Democratic Party (Pd), distanced himself from the proposals, saying ''to us it does not apear that 99% of citizens stand to gain'' and calleing for the bill to be modified. Italian trades unions Cisl and Uil hailed the planned reduction in income tax but said more needs to be done particularly in terms of reviewing the proposed rise in VAT and cuts in tax breaks. The Stability Law was approved by the cabinet last week and is about to begin its long journey through parliament. Premier Mario Monti has said he is willing to reconsider elements of the bill on condition that the final balance remains unchanged.