Italy's 2014 budget bill opens divisions within majority parties

Deep differences emerged on Friday among lawmakers of the Italian majority parties over the 2014 budget bill approved by the left-right government of Prime Minister Enrico Letta earlier this week. Members from the center-left Democratic Party (PD) and its center-right partner People of Freedom (PdL) said the package, which features a 27.3-billion-euro (37.3-billion-U.S. dollar) adjustment in public finances over the 2014-2016 period, did not do enough to boost the much needed economic recovery. PD's Deputy Economy Minister Stefano Fassina said that the strategy to cut public spending and reduce labor costs was mistaken, while according to Sandro Bondi, a PdL senator and former culture minister, the package was hiding "disguised taxes." The budget bill, which has now has to be scrutinized and approved by parliament by the end of the year, foresees government privatizations to help reduce the Italian massive debts. Health cuts were not included in the package, while a recently scrapped home tax was incorporated with local rubbish and service levies into a lighter tax. Letta also promised that overall tax burden would decrease from 44.3 percent to 43.3 percent for families and businesses over three years. Former prime minister Mario Monti on Friday confirmed his "irrevocable resignation" as founder and head of the centrist Civic Choice party over the bill, that he sharply criticized saying it was "timid" in tax cuts and did not do enough to stimulate growth. Monti, whose technocratic government had managed to restore Italy's credibility when the country was on the edge of a dramatic debt crisis in late 2011, added that he would remain in the Senate within its mixed party grouping. Also on Friday, Italian banking and industrial associations complained in a joint statement that "rapid and decisive action aimed at cutting public spending was missing" from the budget bill and called for "more incisive reduction in taxes and in labour costs." Meanwhile, labor unions, which represents millions of workers in Italy, have threatened to strike over linear spending cuts and a freeze on public-sector salary rises. "Now the bill will pass to parliament where we will try to improve some aspects," Economic Development Minister Flavio Zanonato said. He acknowledged that the package was lacking some "numbers." "For example, I would have liked much greater cuts in the tax wedge," the minister noted. Echoing his words, Minister of Public Administration and Simplification Giampiero D'Alia highlighted that the government was willing to "collaborate with parliament," because the package "can and should be improved." Italy, whose economy is contracting among soaring unemployment and declining spending power, has been struggling to keep its deficit below 3 percent of gross domestic product (GDP) to meet the European Union (EU) ceiling. The country's public debt, which will rise to 134 percent of GDP next year according to estimates of the Organization for Economic Cooperation and Development (OECD), is the second largest in EU after Greece.