Italy has outlined how it intends to balance its budget a year earlier than previously planned. A new 45 billion euro plan has been announced, which includes cutting costs and increasing taxes.
Details of the measures have emerged after the cabinet held an emergency meeting on Friday. Markets had lost confidence in Italy’s ability to reduce its deficit. July’s plan would have allowed more time for the budget to be balanced – this will now be done by 2013. Tax hikes include a new solidarity tax to be applied to high earners.
Italian Prime Minister Silvio Berlusconi said he was unhappy that taxes would have to be increased:
“In this situation, it is clear that our hearts are bleeding when we think that one of the things that our government prided itself over was the fact that we never put our hands in the pockets of the Italian people, but the global situation has changed.”
The move comes as the government responds to criticism that there had not been a clear plan on how to balance the budget. Austerity measures worth 20 billion euros are scheduled for next year, with a further 25.5 billion euros in 2012. Now the plan has to be approved by parliament within 60 days.