EU austerity contagion spreads (People’s Movement)

Italy’s government has approved a €345½ billion austerity budget that the prime minister, Silvio Berlusconi, said was the result of pressure from Finland, Germany, and the Netherlands. The draft measures—which must still go before parliament for final approval, expected in early September—include a new tax on high-earners and deep cuts to local and national government costs.

They seek to return Italy to a balanced budget in 2013 instead of 2014, as previously planned, and come on top of a €48 billion package agreed in July, when Italy first came under pressure. “It’s €20 billion in 2012 and €25½ billion in 2013,” Berlusconi told reporters after the government meeting.

He said the measures were in line with demands from the European Central Bank in return for support given to Italy’s bond markets. “This programme goes in the direction of what the ECB recommended,” he said. “We therefore decided to meet the demands that the institution was making of us in order to justify itself to other European countries, particularly Germany, the Netherlands, and Finland, for spending public money.”

“My heart is bleeding,” Berlusconi told reporters, saying tax went against his promise “never to put my hand into the pockets of Italians.”

Elsewhere, the Greek minister for finance, Evángelos Venizélos, told the government that an additional €3 to €4 billion in cuts may be needed to account for the larger-than-expected recession, which has resulted in lower-than-expected tax revenue.

Separately, the French prime minister, François Fillon, announced an austerity package aimed at saving €1 billion this year and €11 billion in 2012.

The measures include increases on some capital income taxes, the elimination of loopholes in capital gains tax, increases in tobacco and alcohol taxes, and an exceptional tax levy of 3 per cent on the very rich. The plan also contains proposals aimed at harmonising the French tax system with that of Germany, in preparation for the introduction of the common consolidated tax base (CCTB).

Seeking to win over voters who are angry at further belt-tightening before elections next year, Fillon announced that the government would target the rich with a temporary tax on households that have an income above €500,000 a year, as it aims for a deficit of 4½ per cent of GDP next year. “The reduction of our deficit . . . is a sacrosanct goal,” Fillon told a news conference. “It’s an economic obligation but also a social obligation, because a country cannot live beyond its means for ever.”

Spain’s two main parties have reached an agreement on changing the constitution without a referendum, to include limits on public deficit and debt.

However, the proposed amendment allows the limits to be overridden in case of natural disasters, economic recession, or other extraordinary circumstances, provided that an absolute majority is achieved.

The constitutional amendment will itself not fix limits but will be accompanied by a law limiting the structural deficit to 0.4 per cent of GDP from 2020—bettering even the German limit of 3 per cent. The law must be approved before 30 June 2012.

Many have argued that a constitutional change should not be made in such a small period and without the consent of the people. It is only the second amendment made to the constitution since it was written in 1978 after the fall of the Franco dictatorship.

The mass-selling paper Público led the call for a referendum. Spanish unions have also threatened to push for a referendum on the issue.

Following the announcement members of the public turned to Twitter to call for a referendum as “yoquierovotar” (I want to vote)

People’s Movement · 25 Shanowen Crescent · Dublin 9 · · 087 2308330 · post (at) people (dot) ie
The People’s Movement has launched a new pamphlet entitled The European Stability Mechanism and the case for an Irish Referendum.
This entry was posted in Austerity / Cutbacks, Budget, Civil Rights & Liberties, ECB/IMF, Economy, Elections, EU, France, Germany, Greece, Italy, Superstate, Taxation and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

One Response to EU austerity contagion spreads (People’s Movement)

  1. Pingback: The Consequences When Three Elements Collided

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