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Italy drops proposed tax on high earners
The austerity measures are reported to have caused tensions within Mr Berlusconi's coalition government
The Italian government has dropped plans to introduce a tax on high earners, Prime Minister Silvio Berlusconi's office has said.
The "solidarity tax" on those earning more than 90,000 euros (£79,000) was one of several new measures announced earlier this month as the government aims to balance Italy's budget by 2013.
The announcement came after senior ministers met Mr Berlusconi on Monday.
The Bank of Italy has warned there must be no reduction in the austerity plan.
The government said it would instead step up measures to fight tax evasion.
In a statement issued after several hours of talks, the prime minister's office said it would also exclude years spent at university and military service from retirement age calculations, delaying retirement for some people.
There are also plans to spare the governments of small towns from cuts.
But the statement made no mention of any increase in VAT, which had been widely mooted in the media.
Although the EU had welcomed Italy's proposed new austerity measures, the country's largest union, the CGIL, has criticised the plan and threatened strike action.
The plan is also reported to have caused tensions within the centre-right coalition government.
The Bank of Italy has warned that the government must still save a combination of 45.5bn euros ($65.5bn; £40.2bn) in higher taxes and lower spending.
The deputy head of the Bank of Italy, Ignazio Visco, told a parliament committee that the overall austerity measures "cannot be reduced".
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Comment number 62.
Nic12130th August 2011 - 15:23
'Solidarity' taxes on the wealthy do not punish people for being successful...they are about recognising that people who earn very high salaries can afford to pay more in tax without it having a dramatic effect on their quality of life. Raising Taxes on lower income earners means that their quality of life takes a significant hit and removes their propensity to help grow the economy by spending.
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Comment number 56.
Cliftonensis30th August 2011 - 14:34
So the Italian government has decided to drop the idea of higher taxes for the rich. Why will that come as no surprise to us. Meanwhile Puglia has had to close 19 hospitals because of underfunding and the city where I live is about to impose a city wide tax on electricity (the idea of the local mayor - guess whose party he belongs to!).
The rich / poor divide between north and south is growing.
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Comment number 50.
Brangy30th August 2011 - 13:53
One point that seems to get missed in all these discussions on tax is that if you lower the taxes for the poor they spend the extra in the economy and if you lower the taxes of thew rich they save more.
At the moment where we need all the growth we can get if we want to cut taxes the focus should be on taking the lower paid out of tax rather than lowering taxes for the higher paid.
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Comment number 21.
Dr_Vanadium30th August 2011 - 12:29
Something like 15% of the UK population own 65% of the UK's wealth and resources - tell me that isn't a problem. Wealthy people may innovate, beacuse they have the capital to do so, but they depend on the poor to make their dreams real and ought to show more gratitude, for no man is an island. Business peeps all rely on science, but how many of them employ scientists and pay them well?
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Comment number 14.
Whitefall30th August 2011 - 11:48
Taxation is supposed to be a payment for the services which the government provides for you, such as military protection, police protection and court services.
To say that someone should pay more taxes "just because they're rich", is both immoral and unjust. All those who advocate "taxing the rich" are bitterly envious and full of hatred for people who have a value which they do not.
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